Pridiyathorn, right: Sufficiency and market liberalisation are a good combination.

MR Pridiyathorn Devakula, the head of the economic team for the new interim government, said an economic policy of sufficiency could be implemented suitably along with market liberalisation by boosting growth from existing resources.

He insisted gross domestic product (GDP) growth next year would not be lower than this year's economic growth, expected to be 4.5-4.6 per cent. He said that next year's GDP growth was anticipated at 4-5.3 per cent.

The new government headed by General Surayud Chulanont recently announced a key economic policy of sufficiency, focusing not only on GDP growth, but also on income distribution.

Pridiyathorn, also governor of the Bank of Thailand (BOT), yesterday defined an economic policy of sufficiency amid Thailand's current market liberalisation.

He said a sufficiency economy and market liberalisation were a good combination.

"If we had market liberalisation without a policy of sufficiency, growth would be boosted too fast beyond our limits," he said. "And this could lead to a crisis similar to what happened in 1997, when we grew too fast with insufficient savings. We needed to depend on foreign capital of more than US$100 billion [Bt3.76 trillion]. Then we fell down."

Pridiyathorn said a sufficiency economy could get along well with market liberalisation if the economy did not grow to exceed its capacity; otherwise, excess growth would produce inflation and bring about capital outflows.

"As announced by the CNS [Council for National Security], Thailand is still a liberalised market, with the private sector as the key driver boosting the economy," he said.

He said a sufficiency economy began with the individual, the smallest unit of society, who would not spend more than his income, while businesses must not expand their operations to exceed their capital limitations.

In addition, Thailand's economy should grow within the limitations of existing resources, he said. In other words, the country will have to boost resources to support economic growth.

"Economic growth must not exceed existing savings, which would cause problems," said Pridiyathorn. Moreover, the country must restrain the economy from expanding to a degree that creates a negative impact on the environment and finally affects people's "balance of life". If the environment were damaged, tourism would consequently be affected.

"How much GDP growth there should be is uncertain. It depends on how the growth would help distribute incomes. How much growth there should be depends on the environment and resources. Our economy depends on the global economy, as well. But for now, economic growth does not exceed our capacity," he said.

The head of the new economic team said earlier-than-expected government spending and private-investment recovery, as well as higher-than-expected exports, would boost economic growth for the rest of this year and next year.

He said the government's 2007 fiscal spending would be only three months late, rather than the nine months expected earlier.

In addition, with a clearer political situation and stable oil prices, private investment is likely to accelerate from this year's fourth quarter rather than early next year

 as expected earlier.

BOT assistant governor Atchana Waiquamdee said yesterday exports were likely to grow higher than previously expected in the second half, because export growth in the first two months of the second half was higher than had been predicted. Thus, exports will be the key economic driver for the rest of this year.

Pridiyathorn also said the new government would implement only those mass-transit projects that really benefited the public. For example, the government will select and build a key electric-train route before building the next route to be connected to the first.

He added that the three earlier electric-train routes planned by the former government might be reviewed.

Atchana said the economy was still decelerating in the second half and that original forecasts of fourth-quarter results had not changed.

But there will be clear reasons for growth in next year's first quarter as a result of declining oil prices and government budget disbursement.

She said that so far, the economy had not suffered a psychological effect from the coup. Instead, the problem is that economic growth is not broad-based, but rather based only in the export sector. This means domestic vendors do not feel good, because they do not benefit from high exports.

She added that in terms of income distribution, big companies were benefiting, but small ones were not.

Prakit Shinamornpong, deputy chairman of the Thai Hotels Association, said tourist cancellations reached 20 per cent during the coup, but now bookings have begun returning to normal. Next year, the tourism sector should improve, driven by the new Suvarnabhumi Airport and its boom effect on Pattaya. He hoped a target of 15 million tourists would be reachable.

Real-estate expert Manop Pongsawat said he predicted that by the end of this year, there would be a price war among condominiums, especially those located close to the Skytrain, because many condos were being launched simultaneously. The political factor has had only a short-term effect on the property sector. In the long term, real-estate developers fear high interest rates.

Fiscal Policy Office director Ekniti Nitithanprapas said that next year, Thai exports might face a risk from a slowdown in economic growth, which would affect the automotive and electronics sectors.

Anoma Srisukkasem

 The Nation