Abhisit: Rebound at least a year away

ECONOMY

The Thai economy is likely to take more than a year to fully recover, Prime Minister Abhisit Vejjajiva said yesterday at the annual meeting of the National Economic and Social Development Board (NESDB) to draft the 11th national economic and social development plan (2012-16).

Thailand's economy fell more than expected in the first quarter, prompting the state planning agency to cut its forecast for the year to a contraction of between 2.5% and 3.5% from an earlier projection of zero to -1% growth.

Gross domestic product fell 7.1% in the first three months compared with the same period a year earlier due to falling exports and tourism, after declining 4.2% in the previous three months.

Exports declined 19.9% in US dollar terms in the first quarter while imports fell 38.3%. Household consumption fell 2.6%, the first reduction in 10 years, while investment shrank 15.8%.

Most forecasters were expecting a first-quarter contraction around 5.5% because Thailand's major trading partners also had lower growth than expected.

"Thai society has yet to consider the global impact to apply in the country's social and economic development plan, be it in agriculture, tourism or social development," said Mr Abhisit. "The new social and economic development plan needs to consider how we are going to handle the impact from globalisation on the Thai economy."

He said other key factors that needed to be addressed in the plan included the impact of climate change, food security and alternative energy. "Thailand has the potential to supply food and raw materials for alternative energy, if we can restructure these sectors to increase competitiveness."

He said Thailand should become more urbanised and upgrade its logistics system to cut costs and create greater access to the global market.

To stimulate the economy in the longer term, Thailand also needs to improve its service sector, especially the creative economy. In terms of social development, Thailand needs to upgrade education, public health and the promotion of public participation in the development process.

He accepted that the existing political conflict was a key obstacle in Thailand's development. Thailand thus needs to create a political system that promotes ethics for politicians.

Narongchai Akrasanee, the NESDB director, said Thailand should improve relations with its neighbours, East Asia, the Middle East and Africa to boost trade and investment.

Relate Search: Abhisit Vejjajiva, National Economic and Social Development Board