Govt seen driving economy next year

Economy December 31, 2012 00:00

By The Nation

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The government will assume the key role in driving the economy next year, according to Kasikorn Research Co.

The government’s proactive measures to boost incomes and spending, as well as to ameliorate the high cost of living, have helped reinvigorate the economy substantially this year.

However, continuity in those initiatives next year will hinge somewhat on domestic politics, the research house said.

The government is still expected to be an engine of growth for the economy via stimulus policies that might not differ much from this year – budget expenditures and schemes permitted by special laws. This should help boost spending in certain industries and businesses. That, along with an expected recovery in exports, should help the economy to expand at nearly the 2012 forecast rate of 5 per cent.

Close attention should be paid to the government’s long-term infrastructure programmes. If the Public-Private Partnership Bill and Investment Bill that have been passed by Parliament become law next year, they will underpin economic growth by the fourth quarter and over the next several years.

However, public debt will likely rise due to increased borrowing, KResearch added.