WB slashes Thai growth forecast to 4.3 per cent
The World Bank said Thursday it has slashed its projection for Thailand's economic growth to 4.3 per cent this year due to sagging investor confidence and slower exports.
The bank had originally predicted Thailand's gross domestic product (GDP) would grow by 4.6 per cent, already down from last year's 5.0 per cent, said Kazi Matin, a World Bank economist for Southeast Asia.The revision puts the Thai economy among the worst performers in the region, trailing the expected 8.0 per cent growth in Vietnam, 9.6 per cent in China, 6.3 per cent in Indonesia, and 10.5 per cent in Cambodia. Average economic growth across Southeast Asia is expected to be 5.6 per cent, the bank said. Low investor confidence has put pressure on short-term prospects for the Thai economy, Matin said. Following political disturbances in 2005 and the coup in 2006, investor confidence has steadily fallen, while controversial government policies such as capital controls and proposed changes to investment laws have scared foreign investors. "Low investor confidence is the biggest weakness of the Thai economy," Matin told reporters at the release of the bank's annual report on Thailand. A clear policy agenda is crucial in the near term to boost sagging confidence, he added. "The signing of the Japan-Thailand free-trade agreement is already having a positive effect on investor confidence, even if the actual impact on exports and investment will only be felt after it is fully effective in October 2007," he said. World Bank economist Kirida Bhaopichitr said exports, which account for two thirds of the Thai economy, are projected to grow by only 6.0 per cent in 2007, down from 9.0 per cent last year. The decline was caused by slowing economies among key trading partners and a stronger exchange rate. The Thai baht rose by 12 per cent over the last year, which hurt exports by making Thai products more expensive overseas and slashing the value of repatriated profits. The currency is now trading just below 35 baht to the dollar. "The baht should appreciate further this year with the current account continuing to be in surplus," Kirida told reporters. "Baht appreciation should be slowed down if the existing low investor confidence improves, so that private investments could rebound," she added. The World Bank forecast private investment for 2007 would be flat from last year while state investment would decline because of low budget disbursement. Agence France Presse
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