Finance looks to 5 per cent economic growth next year

Thai economic growth is expected to reach 5 per cent next year after domestic and global recovery starts gathering steam, Finance Ministry permanent secretary Rungson Sriworasat said yesterday.

Meanwhile, the Fiscal Policy Office has revised down the country's 2014 economic-growth forecast to 2 per cent from the 2.6 per cent estimated in March, following the economic slowdown experienced in the first half of the year.

Rungson cited economic recovery due to the revival of domestic investment projects and economic stimulus measures, as well economic upturns in global markets, for next year's projected Thai expansion.

"If projects come with consistent implementation as targeted, spending will follow. I believe this could boost next year's growth to 5 per cent. The global economy is gradually improving, and that could support Thai exports," he added.

Krisada Chinavicharana, director-general of the Fiscal Policy Office, said this year could now see 2-per-cent Thai economic growth, within an expected range of 1.5-2.5 per cent.

Political unrest is cited as the main reason for first-quarter contraction of 0.6 per cent, while the prolonged political situation eroded the confidence of consumers and businesses in the first half of the year.

However, the latter half is expected to see improvement in both consumer and investor confidence, he added.

Meanwhile, Thailand's 2014 manufacturing gross domestic product has been revised down to 1-2 per cent from the previous estimate of 2-3 per cent, given rising oil prices, the baht's appreciation and global economic uncertainty, said Somchai Harnhirun, director-general of the Office of Industrial Economics.

The Manufacturing Production Index (MPI) has also been cut, to 1 per cent or less, from 1.5-2 per cent.

"People's confidence has improved, but the economy has not yet made a definite recovery. We need to monitor the economy in the latter half," he said.

The 2014 fiscal budget will be pushed during the current quarter, while the fourth quarter is expected to see a new government being formed under the junta's provisional charter, he added. The National Council for Peace and Order's economic policy, which is focused more on structure than on stimulus, is good for the long term, given its elimination of problems and obstacles in laws, manufacturing and business processes, said Somchai.

In the first six months of the year, imports of raw materials shrank 19.8 per cent and imports of capital goods contracted 12.9 per cent, reflecting unsatisfactory manufacturing, he said.