Government stimulus package 'all right as far as it goes'

Dr Kirika Bhaopichit expressed her agreement with the government's measures to boost demand in the short and medium term and to cushion the drop in Thai economic growth, which has been hard hit by the global downturn.

"The short-term measures are quite appropriate and timely, but we should also look to the long term. Over the next two or three years, the world economy is likely to stage a recovery. By that time Thailand must be ready to compete. So the medium-term measures are necessary to help us stay ready," she said.

Kirika was speaking on the sidelines of a joint conference of the World Bank and the National Economic and Social Development Board held at the Siam City Hotel.

Nobody knows for sure when the global economy will stage a recovery after facing the most severe downturn since the Great Depression in the 1930s. This year the world economy may experience zero growth.

Yet Kirika said that if the economy was to recover over the next two to three years, the Thai government should plan to invest in the infrastructure in the medium term while the private sector should use this opportunity to reinvest or make the necessary adjustments to stay competitive.

"When the world recovers, the Thai private sector must be ready to compete. They have to ask themselves whether their products will be able to compete with others' by then," Kirika added.

Kirika supports the government's investment in infrastructure, which will not only stimulate demand in the medium term but also boost confidence in the short term and encourage the private sector to make more investment.

The World Bank still retains its forecast of a Thai economic growth rate of 2 per cent this year. Any further adjustment will depend on the overall global economic conditions, Kirika said.