Thai Economy Projected To Grow 4.5 Per Cent Next Year

Thai economy projected to grow 4.5 per cent next year

BANGKOK, Nov 30 (TNA) – The Thai economy next year is projected to expand 4.5 per cent, boosted by an easing of the fuel price volatility, inflation rise and interest hike, according to a top banker.

Kasikornbank’s President Prasarn Trairattanaworarkul forecast the economy would grow at that rate next year because fuel prices are expected to be lower than those of this year. It would help curb the inflation rise.

As well, interest rates are expected to decline in 2007, making private companies feel more confident of the country’s economy.

The sooner-than-expected budget disbursement for the 2007 fiscal year is another positive factor to the economy.

He conceded the strengthening of the baht and an economic slowdown in key trading partners had dampened the export growth.

He believed the Thai economy would pick up next year because the general election is expected to take place.

Mr Prasarn said the baht had appreciated sharply because the US dollar had weakened due to an economic slowdown of the US.

Previously, many currencies, except the baht, had strengthened. So, it is not unusual the local currency would appreciate considerably later.

He said the baht appreciation also stemmed from speculation, which could be curbed to a certain extent by the regulator because the currency was allowed to move by market mechanism.

Because of this, he suggested exporters make a forward contract to hedge against risks.

Mr Prasarn viewed the Bank of Thailand’s decision to raise the ceiling of credit card interest rates to 20 per cent would not adversely affect card users. But it would have an impact on those who fail to service debts.

Source: TNA - 30 November 2006