Thailand should "persevere" in their efforts: IMF

After the conclusion of the annual review, the Article IV consultation with Thailand, the IMF's executive director concurred that skillful macroeconomic management, as well as the strong fundamentals of the Thai economy - including low inflation, healthy balance sheets of commercial banks and corporations, high international reserves, and a moderate level of public debt - have blunted the impact of recent severe shocks and are underpinning a recovery. 

"The external environment remains challenging and domestic tailwinds are weakening," the IMF said in the conclusion.

Credit growth remains strong, but has decelerated in recent months. The stock market rally has fizzled since May, even as housing price growth continues. Business sentiment remains robust while consumer confidence has weakened. In this context, real GDP growth is projected to slow down to 3.0-3.5 per cent in 2013. Next year, public investment projects are expected to become a key engine of growth, boosting growth to 5.2 per cent. With growth driven by domestic demand, the current account surplus is expected to reach a small deficit of 0.2 per cent of GDP in 2014.

"Risks to the outlook are tilted to the downside, dominated by external factors," it furthered. 

External risks deriving from an escalation of the euro area crisis or fiscal policy shocks in the United States have diminished, but are still skewed to the downside. Slower-than-expected growth in major emerging economies, particularly China, would also have a considerable impact because of trade linkages. The unwinding of monetary policy stimulus in the United States may trigger further capital flow reversal from emerging markets. Domestically, the impact of the unwinding of various government policies on private consumption may be larger than anticipated. Finally, political stability has strengthened, but remains a downside risk.

 

(Full text of the conclusion can be seen here: http://www.imf.org/external/np/sec/pr/2013/pr13441.htm)