Thai gov. to tax (remitted) income from abroad for tax residents starting 2024 - Part II

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Finance Ministry may cut growth foreast by 1 percentage point

By ACHARA DEBOONME

THE NATION

BANGKOK: -- The Finance Ministry is ready to chop its 3.5-per-cent economic growth forecast by a full percentage point or even more if the political tensions escalate to the point where there is no government around to make key decisions.

"In the worst-case scenario, when economic activities are disrupted, like the airport's closure or the government's absence, this will affect budget disbursement in the fourth quarter and next year. Our hope that private consumption and investment would take the baton from the government in spurring growth may be dashed," Finance Ministry spokesman Ekniti Nitithanprapas said last week.

Of particular concern is possible political instability in the fourth quarter, when more funds under the Thai Khemkhaeng stimulus package are expected to be released.

"Short-term measures like the Cheque Chuay Chart or others could be sidelined, but investment must be continued as it concerns infrastructure which will boost the long-term prospects of the country."

The economic forecast revision for three scenarios will be unveiled today.

At a Nation Group roundtable last Friday, Ekniti said that in the best case, when the rally continues but stays as it is today, the impact on the economy would be slight. However, if it is prolonged and shows signs of turning violent, it could shave a 0.5 percentage point off economic growth.

Ekniti noted that all possible politically-driven avalanches pose only short-term problems to the economy. However, long-term competitiveness could suffer if political continuity is interrupted.

On December 28, the ministry set the 3.5-per-cent target for 2010 growth, against the 2.8-per-cent setback posted in 2009, on optimism that the government stimulus measures, revival in private spending as well as the global economic recovery would pull the economy out of recession. In January, before the red shirts kicked off their anti-government rally, the ministry was gushing over the apparent turnaround, saying the economy would continue the forward momentum witnessed in the last quarter of 2009.

Ekniti then said the economy this year would outpace that of last year in terms of growth, boosted by the global economic recovery and the implementation of the Thai Khemkhaeng (Strong Thailand) scheme, which would use up to Bt350 billion to prime various sectors of the economy.

Other risks to economic expansion are significant increases in fuel prices, the strengthening baht, possible sluggish investment and the Map Ta Phut environmental standoff.

The University of the Thai Chamber of Commerce last week said the rally in its first 10 days had cost the country Bt7.5 billion-Bt14 billion. It said the damage would rise to Bt21 billion-Bt38 billion as the protest approaches the one-month mark on April 12. And if it drags on for three months, the loss would rise to Bt70 billion-Bt100 billion.

-- The Nation 2010-03-29

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