Thai Fin Min: Economy to shrink 3 pct for the entire 2009


Thailand’s Finance Ministry has forecasted that the country’s economy is likely to contract by three percent for the entire year in 2009 despite a growth of 3-4 percent expected in the fourth quarter.

According to the ministry’s spokesman Ekniti Nitithanprapas, the Thai economy is forecasted to contract between 3.5 and 4.0 percent in the third quarter of this year, when compared with that of the same period last year, and is expected to expand 3-4 percent in the fourth quarter of 2009.

Dr. Ekniti, who is also the director of Macroeconomic Policy Bureau at the ministry’s Fiscal Policy Office, yesterday said the economy, despite the sharp contraction during the first half of the year, has started recovering in the second half of the year and will eventually expand during the last quarter as a result from the improvement mainly in the public expenditures, especially those under the “Thai Khem Khaeng” (Strong Thailand 2012) scheme, along with the economic recovery of major trading partners.

During the third quarter, Dr. Ekniti said, the country’s gross domestic product (GDP) is expected to edge up by about two percent from the second quarter because the economy was bolstered by the faster budget disbursement and the economic recovery of key trade partners, such as China, Australia and Hong Kong.

Although the recovery trend of the global economy would play a positive role to the export of goods and services in the second half of this year, he said, the export volume of goods and services in 2009 is still forecasted to considerably shrink at a high rate of 14.8 percent.

Meanwhile, the country’s import volume of goods and services is expected to decline by 22.2 percent for the entire year.

Regarding the internal economic stability, he said, the stability is expected to improve, with headline inflation for the entire year forecasted to fall to 0.8 percent because of the falling crude oil prices from 2008 levels and the appreciation of the baht while the core inflation, excluding energy and food prices, is projected to fall to 0.4 percent, partly due to the continuation of the government’s measures that help lowering the cost of living.

The unemployment rate, he said, has improved to about 1.8 percent of total labor force, as the re-employment rises following the better expansion of the Thai economy in the second half of the year.

On the external stability, this year’s current account is projected to record a large surplus of 8.0 percent of GDP as Thailand’s trade balance is expected to reach the high surplus of US$20.5 billion, due to the greater fall in import value relative to export value.

The import value is forecasted to contract about 28.8 percent from the high base of last year while the export value is projected to decline by 17.2 percent per.

The ministry has also forecasted that the Thai economy in 2010 would expand about 3.3 percent or within the range of 2.5-4.1 percent, with the government spending under the fiscal deficit framework at 3.5 percent of GDP as the major drive, along with the Government investment expenditures under the “Thai Khem Khaeng” scheme, he said.