Thai Officials See No Drop In Economic Growth

Thai officials see no drop in economic growth

BANGKOK, Jan 20 (TNA) - Economists at Thailand's Ministry of Finance are confident that the country will score a healthy growth rate of 4-5 per cent this year as expected, saying that key economic fundamentals remain strong.

Somchai Sujjapongse, deputy director-general of the Fiscal Policy Office, said there would be no revision in the economic outlook despite the bomb blasts in Bangkok on New Year's Eve, the capital controls imposed last month to curb a surging baht and proposed restrictions on foreign ownership of Thai firms.

The ministry's economic forecast came a day after Bank of Thailand governor Tarisa Watanagase told an economic seminar Thursday that Thailand's economic growth is expected to slow in 2007 from an estimated 5.1 per cent last year due mainly to a weaker global economy.

The central bank cut its key policy interest rate on Wednesday to spur economic growth. It was the first reduction in borrowing costs since 2003 and the first cut in headline rates by a central bank of an Asian emerging economy, other than Indonesia, since a record-breaking oil rally fuelled inflation and a flurry of global rate rises.

The central bank is expected to announce a revised growth rate on January 26.

Mr. Somchai maintained that his office's economic forecast was in line with that of the central bank.

He said the rate cut showed the central bank had shifted its focus to economic growth, adding that the government would do likewise and abandon the balanced budget policy to stimulate the economy.

The two measures combined, said Mr. Somchai, ensure that the country's economic momentum would be maintained.

He also added that the Thai economic fundamentals remain strong with large foreign exchange reserves, low short-term debts, low unemployment and better-than-expected tax collection.

Nevertheless, the authorities would closely monitor the situation as baht appreciation, rising oil prices and interest rate hikes might affect the country's exports which remain the key engine of growth this year, Mr. Somchai said.

Source: TNA - 20 January 2007