Fpo Decreases Thailand Economic Growth Estimate

[george]

FPO decreases economic growth estimate

BANGKOK: -- Worried by many negative factors engulfing the economy, the Fiscal Policy Office (FPO) has decreased its growth estimate for this year to 4.6-5.1% from 6% earlier projected.

Naris Chaisutr, Director-General of FPO, said the economy in the first quarter of this year had been affected uncontrollable negative factors such as drought, bird flue outbreak, and tsunami disaster.

It had also borne the brunt from the temporary shutdown of steel, petrochemical and chemical product manufacturing plants for repair and maintenance to expand production capacity and the rising fuel prices.

He believed the unfavorable incidents would go on just temporarily and the economy would regain momentum in the second, third and fourth quarters.

However, the assumption had not yet factored in the government’s plan to float local diesel oil prices.

Mr. Naris said the economic woes in the first quarter stemmed from the supply side, not the demand.

So, the government had adopted a long-term policy to increase production and create new jobs to boost Thailand’s business competitiveness and stimulate the demand in the short run.

He said the economic growth for this year would be driven by the increase in the private and state investment.

The overall investment is expected to increase by 19.1% per annum and the actual consumption is likely to expand by 5.1% per annum. The export and import in dollar term would grow by 14.7% and 24.1%.

The surge in the import stemmed from the shipment of capital goods by the private and public sectors for investment to accommodate the future growth. It would result in the annual trade deficit increasing to US$7 billion for the whole year.

The current account balance is projected to be in deficit of $500 million or 0.3% of the gross domestic product while the general and core inflation rates are likely to stay at 4% and 1.5%. The employment is projected to increase by 700,000 from last year.

Mr. Naris said the economy in April continued to grow in terms of consumption and private investment, particularly in the construction sector. The unemployment remained low while the international reserve was still high

--TNA 2005-05-31