BOT set to increase growth forecast
The Bank of Thailand (BOT) is likely to revise forecasts for economic growth upward and inflation downward following recent improvement in economic figures.
The Monetary Policy Committee (MPC) yesterday kept the repurchase interest rate intact at 5 per cent per year, for the third time in a row this year. The real deposit-interest rate was in positive territory at 1.55 per cent for the second straight month as the real minimum lending rate was 4 per cent in September. The Industry Ministry's permanent-secretary, Chakkramon Phasukavanich, an MPC member, said the central bank would narrow its economic forecast of 4-5 per cent this year but keep it in the same range because the economy is growing at a better-than-expected pace this year, and is likely to next year. His comment implied the BOT would lift the lower range of the forecast. Atchana Waiquamdee, the assistant governor, said despite a slowdown in domestic demand in the first half, the economy continued to grow satisfactorily in the second half of the year due to accelerating export growth. Declining inflation helped bolster purchasing power. Atchana, the deputy governor-designate, said inflation has declined to lower than expected because of the huge fall in oil prices to US$56 per barrel, compared to the last forecast, which was based on $71 a barrel. The revised economic figures are based on the conservative assumption of oil prices at $65-66 a barrel in the Dubai market. Atchana said the damage caused by the flood is likely to be slightly higher than Bt13 billion, the cost of damage in 2002 when floods had only a slight effect on GDP and inflation. The BOT forecast that headline inflation will be 5-5.8 per cent this year and 2.5-4.0 per cent next year. Core inflation is expected to be 3-4 per cent this year and 3.5-4.5 per cent next year. Meanwhile, Banthoon Lamsam, CEO of Kasikornbank, told a seminar titled "The Economic and Investment Trend in 2007" that political risks remain until the next government. He said it is still uncertain how much the interim government - which will rule for only one year - would be able to push forward with economic policies. After the next 12 months, a risk still existed. "However, the uncertainty will not affect the business sector much," he said.
Anoma Srisukkasem Somruedi Banchongduang The Nation
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