Thailand’s Economic Projection for 2007 (As of February 2007)
The Fiscal Policy Office (FPO), Ministry of Finance, has announced that the Thai economy is forecasted to grow in the range of 4.0-4.5 percent (y-o-y) in 2007, decelerated from 5.0 percent (y-o-y) in 2006 due to expected slowdown in exports of goods and services following softening world economy. However, given that the public sector’s spending can be accelerated as targeted and interest rate could be sufficiently lower to enhance domestic demand, the Thai economy is likely to grow at the upper range of the projection at 4.5 percent (y-o-y).
1. Economic growth The Thai economy in 2007 is expected to expand by 4.0 - 4.5 percent per annum, lower than 5.0 percent in 2006. This slower growth rate is mainly due to declining growth in real exports of goods and services, which were the main economic drivers last year. The real exports in 2007 are expected to grow at 6.4 - 7.4 percent (y-o-y), decelerating from 8.5 percent (y-o-y) in 2006, following the expected slow down in the major trading partners’ economies. Real imports of goods and services are likely to improve from 1.6 percent (y-o-y) growth in 2006 to 7.8 - 8.9 percent (y-o-y) this year. Rebound in imports of goods and services comes from expected domestic demand recovery in the light of diminishing inflationary pressure, declining interest rate, and accelerating disbursement of FY 2007 government budget after approval in January 2007.Real total consumption in 2007 is forecasted to increase by 3.9 - 4.8 percent (y-o-y), a slight improvement from 3.2 percent (y-o-y) in 2006, while real total investment is expected to increase by 4.2 - 6.4 percent (y-o-y) from 4.0 percent (y-o-y) in the previous year. Furthermore, there are critical factors that could support the Thai economy to expand at the high case scenario of 4.5 percent (y-o-y) rather than the low case of 4.0 percent (y-o-y), including (1) the government must achieve its disbursement target of 93 percent of total FY 2007 budget, (2) the state-owned enterprises are able to disburse their capital investments up to the average target of 85 percent of their planned investment budget, and (3) domestic interest rate could be lower sufficiently to enhance domestic demand.
2. Economic stability In 2007, Thailand’s internal stability is further strengthening. Headline inflation is expected to be 2.5 - 3.0 percent (y-o-y) this year, compared with last year’s 4.7 percent (y-o-y). This downward trend of inflation stems from lower costs of production as a result of declining energy prices and strengthening trend of Thai Baht. Dubai crude oil prices are assumed to be around USD 54-58 per barrel, lower from last year’s average price of USD 61.5 per barrel due to anticipated decrease in the world’s oil demand in the light of expected slowdown in the global economy. Thai Baht is likely to slightly appreciate against the USD to 35.5-36.5 this year, compared with last year’s average of 37.9 Baht/USD. This strengthening Thai Baht against the US Dollar is based on the fundamental twin–deficit problems of the US, which should further cause USD depreciation and additional foreign capital flow into Asia including Thailand.
In 2007, Thailand’s external stability remains resilient whereby the current account is forecasted to record a surplus in the amount of 0.7 - 1.5 percent of GDP, compared with last year’s figure of 1.5 percent of GDP. The size of the current account surplus would greatly depend on the prospect for domestic demand recovery since increasing domestic spending will increase the level of imports. Given the improving domestic demand, the trade and current account balances are expected to be in surplus of USD 1.4 and 1.7 billion, respectively. However, if the domestic demand continues to be sluggish, resulting in a slower pace of imports, this would lead to a greater trade and current account surpluses of USD 3.1 and 3.4 billion, respectively.
Blog master said...Report from Fiscal policy Office : This is the last technocrat who have been still alive among the propaganda terms of the coup. The press , feudalism academics or mutant ngos were adapt to minion of coup already sofar.
I don't know that how the coup could manage and control the economic system. I'm serious !
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