Low inflation, low interest rates and high capacity utilisation will act to support the country's growth, BOT Governor Tarisa Watanagase said in a dinner talk on economic issues held by the Indian-Thai Chamber of Commerce yesterday.

Political uncertainty will subside when the general election is called, most likely by this yearend, while the government's mega-projects will improve market sentiment and investor confidence, she said.

The baht would keep rising in step with regional currencies, but the central bank would try to maintain the unit at a level consistent with economic conditions here.

With growth forecast of 4 to 5 per cent for gross domestic product (GDP) this year, the central bank sees domestic demand as the new driving force behind the economy, while the role of exports would decline, as the economies of Thailand's trade partners would perform only moderately.

The government's mass transit projects will also add stimulus to private investment, she said.

Tarisa said some foreign investors still misunderstood that the central bank's 30-per-cent capital reserve requirement as well as the Foreign Business Act draft revisions were part of the sufficiency economy roadmap adopted by the current government. In fact, the sufficiency economy is a philosophy about managing risk and taking the middle path, she said.

Over the first 11 months of last year, some US$16 billion (Bt570 billion) in foreign capital flowed into the non-bank sector, representing around 8 per cent of GDP. This created upward pressure on the baht last year, she added.

Anoma Srisukkasem

The Nation