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Published on December 20, 2007

 Economists have expressed concern that the country might lose its momentum in the long run when any populist policies of the next government are no longer viable.

Supavud Saicheua, managing director of Phatra Securities, said Thailand's economic environment next year was not a big concern as it would be driven by the currently strong fundamental momentum.

For the longer term, however, it would be quite hard to forecast economic conditions when any populist policies of the new government are abandoned.

He said at a seminar entitled "Business and Globalisation" hosted by Bangkok Bank yesterday that all political parties were pushing populist policies to win the general election but no party had disclosed the source of funding to finance policies.

The economic policies of all parties concentrate on the economic stimulus needed by around 85-90 per cent of the population.

"If the new government uses populist policies as the main tool to stimulate the economy, the limited budget will be a problem. A budget is available for these policies for only two years. It would be better for the new government to use the budget to support the economy in the long term," he said. "For example, if it subsidises oil prices, it can do so for only one year compared with using the budget to finance electric trains that could stimulate the economy in the longer term."

He said Thai people now had enough purchasing power.

If the new government implements policies to support the country's fundamentals, it would prolong growth in the longer term. As a result, political factors remain the key to the economy. "If the political situation is clear and certain after the election, economic growth is likely to increase smoothly over the next two years, he said.

Many research houses have forecast Thailand's gross domestic product will grow by 4.6-4.7 per cent next year.

According to Thanawat Polvichai, director of the University of the Thai Chamber of Commerce's Economic and Business Forecasting Centre, the economic environment will remain unchanged in the first quarter next year as the private sector will wait for a clear direction .

With higher confidence in politics, private investment will jump-start and be a key engine driving the economy.

Deputy Prime Minister Kosit Panpiemras said the interim government believed Thailand's gross domestic product next year would grow at least 5 per cent, mainly propelled by domestic investment from both government and the private sector.

However, if exports can grow higher than expected, the economy could probably grow by closer to 6 per cent.

The government estimates exports will slow down next year, given the stalling of the global economy.

Somruedi Banchongduang

 The Nation