Thailand’s Economic Outlook – Fiscal Policy Office increases Thai GDP 2013 projection to 5.3%

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In Thailand’s Economic Projection for 2013 (as of March 2013), Mr. Somchai Sujjapongse, director general of the Fiscal Policy Office, announced that the Thai economy in 2013 is expected to grow steadily, by 5.3 percent (the average of the expected range of 4.8 – 5.8 percent). This projection is an increase from the December 2012 projection of (5%) due to an expansion in domestic spending, especially goods consumption, the main driver of the economic expansion. Private consumption Mr. Somchai indicated, was expanding due to the measure to increase income, such as the increase in the minimum wage to 300 baht nationwide and the rice-pledging project.

Public consumption has expanded in 2013 in response to the converted efforts of the government to accelerate the disbursement of the 2013 budget. In addition, domestic investment continues to be supportive to country’s economic growth this year. An expansion of private investment has been steadily accelerating due to the positive impacts of the government policies to promote economic recovery after the flooding in 2011, including measure to promote investment. Public investment is expected to be executed quickly this year by utilizing approximately 350 billion baht to invest in infrastructure that will restore the nation’s water management systems. External demand will also yield positive results for the exports sector this year, which is forecast to grow by 9.0 percent (expected range of 8.0-10.0) in response to the overall global economic recovery, notwithstanding the impact of baht appreciation to exports sector.

Headline inflation in 2013 is forecast at 3.0 percent (or within a range of 2.5 – 3.5 percent), primarily due to the increasing price of fuel and commodities in the global marketplace. The trade balance this year is projected to record a smaller surplus than in 2012 as import value is expected to outpace exports. This will consequently result in a small current account surplus of 0.4 percent of GDP (within the expected range of (-0.5)-(0.5) of GDP).

Director-General Somchai added, “For economic projection, it is necessary to closely monitor risk factors such as the recent fluctuations of the baht, economic recovery, and growth rates in trading partners. In particular, the US debt ceiling crisis and progress in reaching a solution to European sovereign public debt problems, as well as the potential drought on the agricultural sector and the impact on income of people living in rural areas.”

Source: Board of Investment (BOI)

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