NESDB raises economic growth forecast

economy6The National Economic and Social Development (NESDB) raised its growth forecast for the Thai economy this year to as high as 4 percent, stronger than the 3.2 percent recorded last year, but cautioned against any possible interest rate hike by the central bank, according to a statement released by the NESDB last week.

The main factors the NESDB cited for its optimistic forecast were an expected expansion of exports, acceleration of government investment, recovery in the agricultural sector with rising prices of farm crops, and a reliably strong performance from the tourism sector.

Exports are the main driver of the Thai economy, and last week the Ministry of Commerce raised its forecast for export growth this year to 5 percent, following a meeting with Deputy Prime Minister Somkid Jatusriptak, Thai trade officials working overseas and members of the private sector.

“Five per cent is a challenging target. But with recovering crop prices, higher oil prices, and strong economic growth of many trading partners, Thai exports should grow more stronger this year,” said Somkid, who is regarded as Thailand’s economic czar.

Vallop Vitanakorn, vice chairman of the Federation of Thai Industries, also said the growth target of five percent is a tall order, but he believes it could be achieved because there are good signs that government officials and the private sector would cooperate to support the goal.

Somkid said the government would make greater efforts to forge or improve bilateral trade agreements in order to help Thai exports gain more ground in overseas markets. Under his direction, Thailand would seek to form strategic trading relationships with the United Kingdom, France, Germany, Italy, India, Cambodia, Laos, Myanmar and Laos, among others.

Somkid is encouraging private Thai companies to open branches or trading outlets in cities in the United States, such as New York, as well as cities in China, in order to boost sales in those important markets and to reduce costs from middlemen.

The NESDB said other positive economic trends include rising investment and consumption. The Board forecast investment will grow by 5.3 percent on strong government spending, which is expected to rise 14.4 percent, while private investment will edge up 2.5 percent.

Private consumption is forecast to rise by 2.8 percent, government consumption by 2.6 percent, exports by 2.9 percent and inflation by 1.2 to 2.2 percent.

Porametee Vimolsiri, secretary-general of the NESDB, urged the Bank of Thailand not to raise the policy interest rate yet as the economic recovery is still gaining pace and heavily reliant on fiscal policy. The public sector would bear a bigger debt burden if rates rose, he said, so the policy rate should be kept steady for about a year.