High oil prices and interest rates may wane next year, but the country's export prospects are uncertain, according to financial experts.

Piyasvasti Amranand, chairman of Kasikorn Asset Management at a seminar yesterday hosted by Sripatum University's Faculty of Economics, predicted that crude oil prices would fall to between $50 and $60 a barrel after breaching $70 a barrel this year.

Piyasvasti said oil prices and interest rates had been less volatile during the past two months. He said demand and supply might drop in the medium and long terms. That's because many countries are seeking new oil reserves and resorting to alternative energy such as ethanol and bio-diesel.

 Crude oil prices have in the last two weeks dipped close to $60 a barrel.

If oil prices stabilise, resulting in less inflationary pressure, the policy interest rate should drop by early next year, said Piyasvasti.

"I think the central bank may want to look at the inflation rate in September and next month before making a cut of its 14-day repurchase rate," said Piyasvasti. The market expects the US Federal Reserve to cut its funds rate in the middle of next year and that it will leave unchanged its current rate of 5.25 per cent at its next meeting on September 20.

The downside of the drop in oil prices is that farmers who grow rubber trees, tapioca and sugarcane may be affected, he said. Prices of these products have gone up along with oil prices in recent years. Tapioca and sugarcane are used to produce ethanol.

The slowing US economy is also an increasing risk for Thailand's exports, he said. The housing market in the US has recently shown signs of slowing down, which could have a significant impact on its economy. As one of Thailand's major export markets, the US economy's vagaries can either hurt or improve exports. Other countries in Asia that export their goods to the US would face similar difficulties, leading to a sluggish world economy, he said.

Atchana Waiquamdee, assistant governor of the central bank, said that it was too early for the Bank of Thailand to cut interest rates in the fourth quarter of this year. The BOT and central banks around the world are focused on curbing rising inflation caused by high oil prices, she said.

She added that the appreciation of the baht against the US dollar has largely been caused by the weakening greenback. The appreciation of the baht is unlikely to affect the export sector because it moves in line with regional currencies, she said. If the baht is rising faster compared to other currencies in the region this year, it is only playing catch up after weakening last year as a result of many negative factors plaguing the economy.

Atchana said the economy had decelerated because private investment has been down. But she cautioned that the economy had not worsened as much as people thought.

Piyasvasti said that private investors should not get pessimistic about the next few months. They should think of the long term. "Investors could miss the opportunities if they just look out for unfavourable conditions in the next three months," said Piyasvasti, adding that lower oil prices and interest rates were on the horizon.

Porametee Vimolsiri, adviser to the National Economic and Social Development Board, said economic growth in the second half of this year would be around 3 to 4 per cent compared with 5.5 per cent in the first half. Oil prices, inflationary pressure and uncertain politics remain risk factors for next year.

Wichit Chaitrong

The Nation