NESDB sees 2% growth in best case next year if fast action taken

NESDB sees 2% growth in best case next year if fast action taken

CHATRUDEE THEPARAT

Thailand's economy could still achieve growth of 2% or better next year if the government can succeed in resuming megaproject investments, reviving tourism, and ending political conflict, according to the state planning agency.

"The Thai economy is likely to reach its bottom by the third quarter of next year before it picks up gradually in the fourth quarter," said Ampon Kittiampon, the secretary-general of the National Economic and Social Development Board (NESDB).

However, Mr Ampon is not certain whether the Thai economy would contract in the first half, as the impact from the world economic crisis is expected to grow during that period.

The planning agency said recently that the week-long airport closures and the global financial crisis were expected to cut Thailand's economic growth next year by more than 1%.

Previously, the agency forecast gross domestic product (GDP) expansion next year at 3-4%, but the forced closure of Suvarnabhumi and Don Mueang airports by the anti-government People's Alliance for Democracy prompted the NESDB to revise its projection.

It estimated the closure of the airports would cut GDP by 0.3-0.5% in the fourth quarter and result in lost revenue of 104 billion baht in November and December.

Mr Ampon said the agriculture sector would play a vital role in driving economic growth next year. The new government thus needs to focus on the sector's development and production costs, be it through fertiliser supply, water system development or a rise in agricultural product prices.

The government also needs to ensure capital adequacy of people in the rural areas particularly through the continuation of existing funding projects such as the small, medium and large (SML) community lending programme and the village funds.

In the long term, he said, the government also needed to play a greater role in generating income in order to create safeguards for the Thai economy.

Service sector development should also be based on the fundamentals of Thai culture, wisdom and domestic products, he suggested. "Currently there is still an imbalance between the agricultural and industrial sectors. The Thai economy now relies too much on the export sector."

Statistics showed that exports accounted for 69.4% of GDP in 2006 and 2007, up from an average of 23% from 1980 to 1986. The agricultural sector accounted for 8.8% of the GDP compared with 18% between 1980 and 1986.