ASEAN KEY DESTINATIONS
Thai economic growth may be lower
THAILAND’S economic growth may be slightly lower than previously expected this year due to delays in government spending, minutes from the central bank’s last meeting showed on Wednesday.
But the minutes also noted that “private investment and exports should lend greater support to growth in the following year.”
The monetary policy committee (MPC) voted unanimously on August 6 to keep the one-day repurchase rate unchanged at 2.0 per cent for a third straight meeting, saying the policies of the new military government would boost economic activity.
In June, the central bank forecast economic growth of 1.5 per cent for 2014, sharply lower than the 2.7 per cent expected earlier. It has forecast economic growth of 5.5 per cent for 2015.
The army took power on May 22 to end months of political unrest, which hurt economic activity and disrupted public spending.
It has freed up long-delayed payments of 92 billion baht (US$2.9 billion) to rice farmers, approved infrastructure projects and accelerated approvals for foreign and domestic investment applications halted by the unrest.
Data on Monday showed Thailand avoided a recession in the second quarter as the army’s move to defuse tensions helped shore up consumer confidence.
However, doubts remain about whether the economy will recover as strongly as policymakers expect.
While government spending, consumer demand and agriculture have picked up, manufacturing, private investment, exports and tourism remain weak. And, though the military government has vowed to fast track major infrastructure projects, the full benefits of such spending many not be seen until 2015.
It is also putting the finishing touches on a budget for the year starting October 1, with nearly 18 per cent of the planned total 2.58 trillion baht (US$81 billion) in spending earmarked for investment.
The budget plan has already sparked rare criticism of the military government.
The deputy leader of the Democrat Party, Kiat Sittheeamorn, told Reuters said on Wednesday that too much money was being allocated to compensate for the failed populist schemes of the previous administration, and not enough on areas which would boost real economic activity.
“If there is that kind of (spending) burden on the budget, then they need to come up with a new policy to address the shortcomings,” he said.
Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below