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Thai central bank upgrades economic outlook

BANGKOK (AFP) -- The Bank of Thailand raised its economic growth forecast Friday thanks to strong exports and the relatively limited impact of the worst political violence in decades.

The central bank predicted the economy would grow by between 6.5 and 7.5 percent in 2010, up from a previous projection of 4.3 to 5.8 percent made in April in the midst of mass street protests in Bangkok.

Strong overseas demand has proved a boon for the Thai economy after the damaging effects on the tourism sector of two months of unrest in which 90 people were killed, ending in a bloody army crackdown in May.

Assistant bank governor Paiboon Kittisrikangwan said the repercussions from the protests had eased, while Thailand's overall economic performance in the first half of the year was better than expected.

"The latest forecast reflects the strong fundamentals of the Thai economy," he said.

"The effect of the political situation was limited and the tourism sector has showed signs of recovery," he added.

Paiboon said economic growth was expected to have moderated in the second quarter after a 12 percent annual surge in the first three months of 2010.

He added that the two main risks to the economy were the still-fraught domestic political situation and the trajectory of the global recovery, especially in the United States and Europe.

The central bank, which last week raised interest rates for the first time since 2008, by 25 basis points to 1.5 percent, maintained its forecast for economic growth of between three and five percent in 2011.

Earlier this week the government said exports, the main engine for the Thai economy, hit their highest ever level in June.

-- (c) Copyright AFP 2010-07-23