Sommai still confident of 3.5% GDP growth this year despite slow Q1
Finance Minister Sommai Phasee expressed confidence yesterday that gross domestic product would be able to expand by 3.5 per cent this year, suggesting that the slow first quarter resulted from a slump in global economic activities when compared with last
He also dismissed the possibility that the country is experiencing deflation, though he admitted "there is not enough money to go around" this year.
"There is no deflation but there is no money because the money is in the banks and they will not let go of it easily. The money that we used to get from exports is also not there, since exports have contracted. Money from agricultural products such as rice and rubber has also declined from the falling crop prices despite being able to sell the same volume or more than last year," he said.
"There is less money coming in and less money being produced domestically, but that does not mean deflation. It means that the economy has slowed down," he stressed.
The Bank of Thailand’s latest GDP-growth prediction for 2015 is 3.8 per cent, while the International Monetary Fund (IMF) expects the country’s economy to expand by 3.7 per cent this year.
Sommai said banks had an ample amount of money but they were reluctant to lend it because they do not want to deal with collection costs, and they are not "saints" that would just give money to Thai citizens for free, since they are businesses.
"The ministry has been trying every way to fix the problems surrounding the financial-access issue," he said.
The finance minister commented that global economic activities so far in 2015 had been slower than last year as many countries like Malaysia, South Korea and China were bracing for slower growth.
"China’s GDP growth is expected to be 1 [percentage point] lower than last year. Do you know how much 1 per cent of China’s GDP is worth? I can tell you that it is worth more than Thailand’s total export value to [that country]," he said.
China’s GDP expansion has slowed from 7.7 per cent in 2013 to around 6.7 per cent this year. The IMF expects China’s GDP growth to be even slower, at 6.3 per cent, in 2016.
"Japan’s economy didn’t expand last year, so it bought less, while the slowdown in China’s exports also means that they are making less and they are buying fewer electronic and agriculture products from us, and this is what is happening," he said.
Sommai said the public had to understand that Thailand is "fortunate, since we were able to come out of the grave" and away from an economic contraction in the first six months of 2014 to an economic expansion after the coup.
"Thailand was able to expand by 0.7 per cent last year, and I believe that a 3.5-per-cent expansion in 2015 is definitely possible. That is smaller growth than in Korea and Malaysia, but it is still economic growth when others are slowing down, which indicates that the global economic activities in 2015 are slower than in 2014," he said.
Sommai said the country could no longer depend largely on exports and everyone in the country had to produce something to fill the economic void left by less contribution from the export sector. Meanwhile the government has the responsibility to invest, so there is a need to close tax loopholes to increase revenue.
"We are doing tax reform because we want to expand the tax base to increase the income of the government," he said.
He said more stimulus measures for the agricultural sector and small and medium-sized enterprises should be launched this year.
