Thailand 'could' recover in 2010

Thailand can expect to see a contraction of 2-4% in 2009, largely due to the slowdown in the US, European and Japanese economies, according to the International Monetary Fund.

Nissanke Weerasinghe, an adviser to the IMF's Asia-Pacific department, said that Thailand would rebound to 1% growth next year, as the G3 economies began to recover in mid-2010.

"Assuming no major shortfalls in policy implementation, and that political stability is maintained, the fall in GDP growth could be contained to a range of between -2% and -4%,'' Mr Weerasinghe said Friday in Bangkok.

The projection compares with an estimated -2.5% decline in the economy by the Finance Ministry's Fiscal Policy Office and a projected -2% fall from the Asian Development Bank.

Mr Weerasinghe, who led an IMF team to Thailand as part of an annual review, said the difference between a -2% contraction and -4% would hinge on "how much the US economy and [Thai] exports will decline and how much fiscal stimulus will kick in''.

Exports, which account for as much as 70% of the Thai economy, have plummeted in recent months, as demand has contracted across the globe.

But Mr Weerasinghe said Thailand was far from the hardest hit economy in the region, with more export-reliant countries such as Singapore, Taiwan, Hong Kong and Japan all expected to fare worse this year.

Thailand has an appropriate stance in fiscal and monetary policies, Mr Weerasinghe said, with short-term stimulus spending, including this year's projected budget deficit, equal to 4.5% of GDP.

"It's about the right size. The challenge will be to ensure speedy and complete implementation,'' he said.