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Published on September 18, 2007

The ADB has kept its projection of the Kingdom's economic growth unchanged at 4 per cent this year, the lowest rate in six years, and 5 per cent next year, while it has revised upwards the forecasts for other Asian countries.

Jean-Pierre A Verbiest, the bank's country director for Thailand, said the government's investment was likely to be evident in the second quarter of next year, even though the general election would take place in December and a new government be established in late January. The impact of the government's spending on the economy will be delayed.

"You can't change things around very quickly. The 5-per-cent growth projection is conservative," he said.

Verbiest said he was worried that the economy was growing much below its capacity. As economies of other countries have expanded at an impressive level, the Thai economy has risen at a slower pace over the past few years. In addition, the Kingdom has been losing competitiveness to neighbouring countries, such as Vietnam, Malaysia, Indonesia and even the Philippines, where investment has expanded greatly in the period.

"The country has been missing opportunities over the past two and three years when the world economy had been good. Thai investment and the economy have grown slowly, meaning that incomes have gone stagnant over the period. And we don't know at all what will happen in the next few years," he said.

He recommended that to keep its economy growing continuously, the government should give priority to three factors: keeping a flexible foreign-exchange system, speeding up high-quality infrastructure investment and promoting a sound economic environment.

The fiscal position and macroeconomic management were not a concern, he said.

The government should restore confidence and promote its policies, particularly mega-projects, as the current economic global and domestic environment cannot do much to motivate investors, he said.

He said the election campaign, in general, would boost spending, leading to a recovery of private consumption. But exports will slow down in the second half of the year, adversely affected by the baht's appreciation and the US economic slowdown.

All Asian countries, except Thailand, have shown economic performances improving more than earlier forecast in April.

The regional economy is projected to grow 8.2 per cent this year, up from the previous figure of 7.6 per cent. Economies in Southeast Asian countries, except Thailand, have produced impressive accelerating growth this year, with a projection of 6.1 per cent, up from 5.6 per cent in the previous forecast. 

Anoma Srisukkasem

 The Nation