ECONOMY

BOT Governor puts balanced growth above GDP

The Nation

BANGKOK: -- Bank of Thailand Governor Prasarn Trairatvorakul urged the government put in place the balance of stability, competitiveness and quality of life, rather than focusing solely on the economic growth rate.

At the seminar on "How GDP Reflects Thailand’s Economic Strength" hosted by the House Committee on Monetary, Fiscal and Financial Institutions, that gross domestic product (GDP) is an economic indicator but it could not indicate the economic strength without the three components. A country needs stable growth, which would lead to long-term competitiveness as well as better quality of life, which can be achieved through equal access to basic services.

He noted that stability will be assured, if growth is not fuelling speculation or excessive household debts or uncontrolled loan growth. Meanwhile, growth should spread through all parts of the economy, so that one part can support another when an unexpected event occurs.

He noted that GDP growth rate does not reflect competitiveness, as the growth rate could be driven mainly by consumption not investment. Without improvement in the production process, competitiveness could stall and fall eventually. In the case of Thailand, competitiveness is low compared to the GDP, as shown through the GDP per capita - a measure of the total output of a country that takes the gross domestic product (GDP) and divides it by the number of people in the country. The per capita measure shows how much a Thai individual contributes to the GDP.

"In the International Monetary Fund’s 2011 ranking, Thailand’s GDP was the 31st biggest in the world from 183 countries, but its GDP per capita was the 90th of the world," he noted.

The latest IMD World Competitiveness also showed that Thailand’s ranking fell from the 27th in the previous year to the 30th, from 57 countries.

Prasarn noted that another component of economic strength is the quality of life, when cost of living is kept at appropriate level and population is given equitable access to basic necessities. To him, GDP growth rate could not reflect this qualitative aspect.

"If an economy is to demonstrate strength, economic and social inequality must decline. Inclusive growth must be warranted with equal access to basic services like education, health care, legal protection and funding," he said.

He also urged all policy makers to join hands in leading the Thai economy towards sustainable growth path, which should ensure the quality of life to all and strengthen the economy inside out.

-- The Nation 2012-07-31

Politicians all over the world should listen to his advice.

Politicians all over the world should listen to his advice.

Which bit? That policy makers should hold hands?