• 
• 

Published on September 4, 2007

The National Economic and Social Development Board (NESDB) is taking an optimistic view of economic growth for the year, keeping its projection unchanged at 4-4.5 per cent given that expansion in the second quarter accelerated to 4.4 per cent.

The economic think-tank believes the economy bottomed out in the first quarter, when it grew by 4.2 per cent. Second-half growth is expected to outpace pace the 4.3 per cent recorded in the first six months.

However, the NESDB urged the government to speed up infrastructure investment, particularly mass-transit systems, accelerate approval procedures for petrochemical investment worth Bt70 billion, quicken 2008 fiscal budget disbursement and actively boost tourism promotion, in order to help the economy expand by more than 4.3 per cent.

Secretary-general Ampon Kittiampon said yesterday that exports would continue to be a key economic engine for the rest of the year, followed by private investment and consumption amid the improving political situation.

Nonetheless, he expressed concern over the US sub-prime mortgage problems. The phenomenon could adversely affect not only Thai exports to the US market, accounting for 12.9 per cent of the Kingdom's exports, but also to the Chinese market, which account for 9.3 per cent and which could also be influenced by the US mortgage mess.

"I believe economic growth this year will not be lower than 4 per cent, and will possibly be in the mid-range of the forecast. It could be higher than 4.3 per cent, if the government rushes to push investment and business confidence turns back rapidly," Ampon said.

Growth in gross domestic product in the first half was in line with the Bank of Thailand's forecast. Assistant governor Suchada Kirakul said the economy could expand by 4.5 per cent in the second half of the year.

The NESDB is confident that exports for the whole year will rise by the targeted 13 per cent, based on an estimate of just 7-per-cent growth for the rest of the year. Exports by both the agricultural and manufacturing sectors could exceed the projected increases of 5.5 per cent and 13.3 per cent, respectively.

This key economic driver will however probably expand by 10 per cent in the second half, resulting in export growth of 16 per cent for the year. Exports rose by an impressive 16.6 per cent year on year in the first seven months, Ampon added.

"Exports usually grow quickly at the end of the year, but we are still conservative by keeping the target unchanged at 13 per cent. It is not difficult to reach the target, as 81.4 per cent of export goods in the seven months have already grown higher than the target," he said.

The NESDB revised

downward its projection for growth in private investment from 1.5 per cent to one

per cent, after it expanded

only 0.8 per cent in the first half. But there are positive

signals in the construction

sector, which is predicted to expand 3.7 per cent in the

second half - higher than 0.4 per cent in the first six months.

The think-tank also revised its forecast for growth in private consumption downward to 1.7 per cent from the previous figure of 2.2 per cent.

Ampon said the recovering political situation would boost the confidence of both business and consumers. Imports of capital goods have shown signs of recovery despite a contraction in July.

"Private investment remains an important factor to drive the economy during the end of this year to the beginning of next year. Private consumption, which has already bottomed out, has also picked up gradually," he said.

The NESDB expects that the government's budget disbursement in the 2007 fiscal year will be higher than Bt1.5 trillion or 93.3 per cent, compared with the current level of 83.4 per cent. But state-enterprise mega-projects need to be hastened, as their budget disbursement might be lower than planned.

Ampon said that if well prepared, much of the investment budget in the next fiscal year - fiscal 2008 - could be disbursed in the final calendar quarter of this year.

Wichit Chaitrong,

 Anoma Srisukkasem

 The Nation