KTB says political strife is biggest economic risk

KTB president Apisak Tantivorawong yesterday described the target as conservative.

The bank does not foresee great improvements in economic conditions in the second half, as investment will not increase significantly and there is no sign of demand for long-term financing.

Recurring lending has grown due to the increases in product and raw-material prices. However, as sales volume is stagnant, there are no plans for new investment though capacity utilisation has been at a high level for two years.

Apisak said that only political stability would improve investor confidence.

"Politics is the primary risk for the Thai economy, aside from a number of external risks. Though oil prices are easing, we don't know if the US sub-prime crisis will worsen. We thought earlier that the US crisis would be brief, but now it's prolonged and it's unclear how it will end. We have to be alert for external risks, and now an internal risk emerges. This would pose problems for the country," he said.

He said the instability had shaken investor confidence and the private sector was anxiously waiting for a better situation before resuming investment activity.

He added that confidence would be the first factor to lift the economy, before public investment strengthens sentiment. Then private investment would follow.

However, he believes the current chaotic situation will be brief.

KTB has temporarily shut down three branches in risky locations - Government House, the Revenue Department and the Finance Ministry - following the political unrest.

"We put a top priority on employees' safety. We are also worried about the safety of clients if any third party is causing problems. We therefore decided to shut down those branches," he said, adding that the Thai Bankers' Association has not yet discussed the issue of closing branches.