Economy likely to take a hit because of political turmoil

However, the country’s GDP in the third quarter of this year is expected to grow slightly, compared with the second quarter of this year when the country’s domestic consumption declined. Exports have also grown only 1 per cent this year, while both domestic and foreign investors have still not committed to making new investments, the school’s dean, Assoc Prof Nada Chunsom, said.

The school, said Nada, had already adjusted GDP growth from 4 per cent earlier this year to 3.7 per cent in the third quarter. However, this did not take into account the effect on the economy of the current political impasse. 

The country’s political turmoil, said Nada, also had an impact on consumer spending in the last quarter of this year, and could also affect the tourism sector, which officially entered its high season last month. As a result, the school had decided to revise down the country’s GDP from 3.7 per cent to 3.4 per cent. The forecast is based on the country’s year-end 1 per cent estimated export growth. 

Meanwhile, the school has also revised down the country’s GDP for 2014, from 4.9 per cent to 4.6 per cent. 

It is expected that a global economic recovery next year, led by gains in the US market, will help to boost Thailand’s exports in 2014, with a better year-end result than the 1 per cent estimate for this year.

The school also expects the government’s mega-projects – both the Bt350-billion water and flood-management scheme, and the Bt2-trillion mega-infrastructure project – will encourage new domestic and foreign investment in 2014.

 

Innovative Economy

Although the country’s economy will continue to maintain a growth average of 4 per cent in 2014, the government needs to focus on a long-term economic strategy that is sustainable, Assoc Prof Pradit Wanarat, president of NIDA said. 

Pradit said that without a long-term economic strategy, the country could not maintain sustainable economic growth with key targets. 

“In my view, Thailand’s economic drive should focus on high-end technology products – developing and promoting technology brands; produce value-added agricultural products, including promoting raw agricultural materials for export. Focusing on these areas would lead the country in the direction of sustainable economic growth in the long term, Pradit said.

The country, he said, should also be investing in the research and development of innovative products that could compete on the global market. 

Currently the government invests less than 1 per of the country’s total yearly budget in research and development. This was not enough to drive research and development initiatives, he said.