Thai Economy To Face Many Risk Factors In 2nd Half

[george]

Thai economy to face many risk factors in 2nd half: KRC

BANGKOK: -- The Thai economy is set to experience many risk factors in the second half of this year with rising oil prices being a pressing factor on the trade and current account balances, according to KASIKORN Research Cente (KRC).

The leading think tank reported the country’s economy experienced a slowdown in the first half of this year while the import had significantly increased.

The surge in the import to around 17-18% against the economic growth of 4-5% would not have any impact on the current account balance for this year.

But in the first quarter, KRC said, the economy grew only 3.3% while the import in baht value soared to 26.5%.

According to a survey, economic sectors appeared to count more on the import of goods.

The import value increased to 62% of the gross domestic product in the first quarter of this year from 58% in the same quarter of last year. The value used to drop to 40% when the country experienced the economic crisis.

KRC said should the import in the consumption, production, and investment sectors continue to increase at an accelerating rate from last year, it is expected the import for this year would rise by 7.6% to 24.6%. It would result in a current account deficit of around US$3.25 billion.

Under the circumstance, the higher crude prices are, the more pressure the current account balance experiences.

Since the oil price movement is considered an uncontrollable factor, KRC said, what the government could do now is to seek cooperation from operators in economic sectors to reduce imports and from consumers to save energy consumption, reduce imports of luxury goods, and turn to use local products.

KRC viewed the current account deficit the country was experiencing now remained not of concern because the international reserve was still high and foreign debts had considerable decreased.

As well, the deficit did not stem from excessive consumption. It resulted partly from the import of goods for production for future returns.

So, should the country have high potential for growth at present and in the future, the short-term deficit would not have any effect on the economic stability.

--TNA 2005-06-22