Houses bullish on 2012 outlook

Kasikorn Research Centre and Tisco Research are the first two economic houses that revised up the 2012 economic projection, following the National Economic and Social Development Board's action yesterday.

While the economic think-tank raised the projection to 5.5-6.5 per cent, KResearch raised the projection from 3.5-4.8 per cent to 4.5-6 per cent and Tisco raised the figure from 4.5 per cent to 5 per cent due to the low base of export growth and public spending in 2011.

Tisco revised up its export growth forecast from 7 per cent to 9.6 per cent, following the 39 per cent month-on-month increase in December manufacturing output. Meanwhile, public spending should increase by 11.9 per cent this year, from the previous forecast of a contraction, based on the anticipation that Bt95 billion from the Bt350 billion post-flood spending would be disbursed this year.

Siam Commercial Bank’s research house expected the gross domestic product to expand 4.5-4.7 per cent, thanks to higher consumption, public investment and public spending. The bank expects full recovery in the manufacturing sector in the second half, when machinery imports are completed and all resume normal operations. As such, the GDP growth in the first quarter is likely to contract from the same period last year.

The bullishness was expressed following the release of worse-than-expected economic data for the fourth quarter, which plunged the 2011 economic growth to only 0.1 per cent.

"The growth will be significantly influenced by the recovery in the manufacturing sector as well as post-flood investment," KResearch said. Further boosting the economy would be public spending, but the house expects the investment under the Bt350 billion fund to become clearer in 2013.

Post-flood private and public spending would boost the GDP by at least 1 percentage point, or more if the government can kick off more investment plans.

The research house noted that though the post-flood investment would send a short-term benefit to the economy, the disaster may post long-term disadvantages. Huge losses could encourage relocation among foreign companies for risk diversification. Some businesses may also delay investment until the flood-management plan becomes clearer. Meanwhile, the Thai economy is under the structural transition, given higher operating cost compared to that of other regional countries. The gap would only widen when the minimum labour wage is exercised nationwide.