World Bank Decreases Thai Economic Growth Estimate

[george]

World Bank decreases Thai economic growth estimate

BANGKOK: -- Worried by the expected global oil price hike at more than US$50 per barrel for at least another 4 years, the World Bank has decreased its estimate of the economic growth of Asia this year to 6% from 7.2% and that of Thailand to 5.2% from 5.8% as earlier projected.

Kirida Paovijit, an economist of the World Bank’s representative office in Thailand, disclose the bank had revised its projection of Thailand’s economic growth this year down to 5.2% due to the rising fuel prices and the global economic slowdown, particularly that of China.

The bank cited the oil price rise by 14% to an average of $42 per barrel from $37.5 last year would put a brake on the household consumption in Thailand and push up inflation rates by around 1.5%. It forecast the fuel prices would continue to stay above $50 per barrel for another 4 years.

The bank projected Thailand would experience a trade deficit of around $2 billion or 1% of its gross domestic product of 7 trillion baht since the country needed to import more oil and capital goods while its exports were expected to grow at a slower pace at 13% due to the global trade slowdown.

However, the current account balance was anticipated to be in a small surplus, boosted by the improvement in the tourism-related service balance.

“The expected growth of 5.2% of the Thai economy is close to that of neighboring countries. Negative factors that dampen the economic expansion include rising oil prices and drought,” she said.

Ms Kirida said the bank also viewed the state investment would continue to expand rapidly in line with the government’s policy to implement mega projects.

This, coupled with the expected growth of 15.3% in the private investment, would be a key driving force for the country’s economic expansion this year.

Should the government want to maintain the economic growth of 6.6% for the next 4 years, she said, it needed to enhance the production efficiency by an average of 2.9% per annum compared with 2.3% at present, and increase the investment amount by 18% per annum.

Miss Kirida disclosed a survey on opinions of businessmen from 1,385 companies found business operations in Thailand had constraints in terms of complicated regulations, labor shortage, and incomplete basic infrastructure.

--TNA 2005-04-27