Thai economy expected to expand 5 %
Home consumption, infrastructure investments to be a big boost
The University of the Thai Chamber of Commerce (UTCC) has revised up the country's gross domestic product (GDP) growth forecast to five per cent this year, thanks to domestic demand as well as strong performance from the tourism and export sectors.
The forecast has been raised from 4.5 per cent to 4.8-5.3 per cent.
Thanawat Pholwichai, director of the UTCC Centre for Economy and Business Forecasting, attributed the decision to the government's plan to inject huge investment to develop the country’s infrastructure projects.
Meanwhile, the increase in daily minimum wage to Bt300 nationwide will increase the purchasing power of labourers by Bt100 million.
Export and tourism businesses also will increase by Bt100 million and between Bt100 million and Bt200 million respectively, this year, compared with last year. This is a positive factor in boosting economic growth to at least 5 per cent this year, he said.
The new target assumes average exchange rate of Bt29.3 to the US dollar, inflation at 3.5 per cent and average oil price at $108-$120 per barrel.
Meanwhile, the rising cost of labour and energy continues to be a risk to the country's economy in the second half of this year. This may impact the overall growth estimate. This will have to be closely monitored in the second half, he added.
However, Thanawat believed that the country's economy was still strong and there was no bubble although household debt was rising because of the government's populist policy.
Meanwhile, the decision of the central bank's Monetary Policy Committee to maintain the policy rate at 2.75 per cent is unlikely to impact the country's economic growth.
"We believe that the committee may increase the policy rate by at least 0.25 percentage point in the second half of the year to control inflation and meet the inflation target," he said.