Thailand's economy is expected to expand this year at the low end of the previous forecast of 5.5-6 per cent, the National Economic and Social Development Board (NESDB) says.
Next year, gross domestic product could expand in the range of 4.5-5.5 per cent, amid a number of external challenges including capital inflows that could strengthen the baht as well as measures to deal with the US fiscal cliff and the euro-zone debt crisis.
NESDB secretary-general Akhom Tempittayapaisit said flood recovery was slower than expected. As of November 2, 155 factories - 18.5 per cent of all factories inundated in last year's disaster - were still struggling to reopen. Because of this, industrial output and export will be fall lower than the previous estimate. "There is less chance that the economy can expand beyond 5.5 per cent," he said.
Moreover, global economic recovery is also slower than expected, putting pressure on export value and volume. At the end of 2012, Thailand is expected to show a current-account surplus of 0.8 per cent of GDP, against 1.7 per cent in 2011. It is expected to rise slightly to 1 per cent in 2013.
"The Thai economy next year will resume the normal growth path, mainly thanks to domestic consumption, which should further increase on investment from the public and private sectors. Global economic recovery would also boost the export sector," Akhom said.
Capital flows, however, will pose a big challenge in 2013 and Thailand needs measures to boost short- and long-term growth.
Drought
Akhom also expressed concerns about drought, the impact of the higher minimum wage on labour-intensive industries, and appreciation of the baht. He noted that the baht could strengthen faster than expected because of quantitative-easing measures in many countries. Oil prices could also rise faster than expected on excess liquidity, and this could put pressure on inflation.
The NESDB based its 2013 forecasts on the assumption that the global economy would grow by 3.9 per cent, Dubai crude oil would move in the range of US$108-$113 per barrel against $109.50 in 2012, and the baht trading at 30-31 to the dollar. Export value should rise 4-5 per cent next year, while the think-tank expects 22.5 million tourists, a 2.7-per-cent increase from 21.9 million in 2012.
Meanwhile, Southeast Asia's growth will remain resilient over the next five years as stronger investment and private consumption reduce dependence on exports for expansion, the Organisation for Economic Cooperation and Development (OECD) said in a new report. Governments in Southeast Asia have loosened fiscal policies to spur growth.
Indonesia's growth will outperform its neighbours', with a 6.4-per-cent annual rate of expansion from 2013 to 2017, the OECD estimated, equal to that recorded in the two decades before the 1997 Asian financial crisis.
The Philippines will expand about 5.5 per cent a year from 2013 to 2017, while Malaysia and Thailand will see annual expansion of about 5.1 per cent, the OECD predicted. Singapore's economy may grow 3.1 per cent a year.
For the region's less developed economies, Myanmar's growth outlook has improved "substantially" amid political reforms, which are expected to lead to a large influx of foreign investment, the OECD said.
High inflation is a "major downside risk" for Vietnam, it said.
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Source: http://www.news.thethailandlinks.com/2012/11/20/nesdb-puts-2012-growth-at-5-5-as-oecd-sees-resilience/
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