3.2% GDP forecast in 2010

ECONOMY

Thailand's economy will likely grow by 3.2% next year, says the University of the Thai Chamber of Commerce.

Global recovery and the rising prices of agricultural products would drive growth, said economist Thanavath Phonvichai.

UTCC projects economic growth next year in a range of 2.5% to 4%, but has made three forecasts based on different scenarios. It sees growth of 3.2% as most likely - with a 75% probability - under conditions of a global economic recovery, stable politics and no investment fallout from the Map Ta Phut legal case.

With these assumptions, exports would grow by 10.1% in value to $164.89 billion while imports rise by 21.1% to $154.33 billion, resulting in a trade surplus of $10.57 billion. Inflation would stay at 3.2%, while the exchange rate would be about 32.5 baht to the US dollar with unemployment at 0.9%.

The second projection - given a 15% probability - is for gross domestic product to grow by 2.5%. This is calculated on a weak global recovery, a lack of political stability and continuing problems in Map Ta Phut.

Under these conditions, the UTCC expects exports to grow by 8.1% to $161.89 billion while imports rise by 18% to $150.33 billion. Inflation would be 3% and unemployment 1.1%.

The third case - with a 10% probability - is for GDP to rise by 4%. This assumes a better-than-expected global recovery, political stability and no investment problems in Map Ta Phut.

In this scenario, exports would grow by 12.1% to $167.89 billion while imports surge by 25.1% to $159.33 billion. Inflation would be 3.5% and unemployment 0.8%.

Mr Thanavath forecast interest rates would stay low in the first half of next year and may increase by between 0.25 and 0.5 percentage points in the second half. In his view, crude oil will average from $75 to $85 a barrel in the first half of next year and from $90 to $100 in the second half.

"Domestic farm prices have a positive trend next year of about 10% higher than this year," he said.