Trump chickens out again.

[Lite Beer]

Special Report: BOT says Thai economy below growth potential

BANGKOK: -- Governor of the Bank of Thailand Dr. Prasarn Trairatvorakul has stated that the Thai economy is currently well below its growth potential and that cooperation of financial and business sectors is vital for lifting growth potential.

In his address at the “Thailand Focus 2014” forum, Dr. Prasarn said that Thailand’s actual growth averaged 2.5 percent between 2008 and 2013.

During the period, the global financial crisis and the Thai mega-flood occurred. The economy did not rebound enough to compensate for lost growth during these large shocks. Demand-management policies are needed to restore confidence and bring growth to full capacity.

Over the downturns during this period, he said, Thailand’s economy has maintained strong fundamentals and stability, and thus allows policy makers to accommodate and boost the recovery without much risk to future growth. The central bank actively takes part in building these strong fundamentals and stability.

Dr. Prasarn said that, over the past three quarters, average growth is close to zero due to political uncertainty and the payback period from previous government policies, most notably the first-car buyer tax rebate scheme, which has dragged down private spending. A prolonged period of diminished economic activity eventually hurts growth potential. When businesses lose confidence, they draw down production and investment, which blocks progress in know-how and technology. A steady growth path is desirable because growth stability helps the private sector make long-term decisions.

The most recent economic data shows that consumption and investment have started to pick up in line with progression of political clarity and accelerated government disbursement. At the same time, world economic growth continues to recover steadily. With all these positive developments, prospect of growth recovery is promising.

Dr. Prasarn pointed out that the current economy shows symptoms that potential growth, which depends on labor, productivity, and infrastructure development, might have reached its limit. For instance, Thailand’s labor supply has begun to gradually decrease because of the ageing trend in society. Research has shown that increasing labor supply by means of increasing retirement age and reliance on foreign labor will not be sufficient.

He said that resources and infrastructure built by the government and the central bank are not sufficient in themselves to lift the economic growth potential. More importantly, financial institutions and businesses must utilize them and act as the main players that will drive the economy to its highest potential.

The private sector needs to add more value to products and services by having long-run commitment and investing in both physical and human capital, such as high-technology machinery, employee training, and research and development.

-- NNT 2014-08-30

[Pib]

Summary: not BOT's fault.

[Nuddy]

Sell that rice.

Build that railway.

[Cake Monster]

Get rid of all that stinking corruption