ECONOMY
Fears of Thai slump rise
- By: Parista Yuthamanop
- Published: 13/01/2009 at 12:00 AM
- Newspaper section: Business
The plunge in Thai economic indicators for October and November show the precariousness of the economy, warned local economists.
Odds are rising that the Thai economy could underperform the Finance Ministry's growth target of zero to 2 per cent for 2009 and fall into an outright contraction.
The global economy still remains shaky and could slow even more than previously feared, said speakers at a conference yesterday hosted by the University of the Thai Chamber of Commerce.
Kobsak Pootrakul, head of the SET Research Institute, said the economic crisis in the United States would be protracted, and that time was needed to clear up their balance sheets.
Thai economic indicators, meanwhile, were very bearish in November, with manufacturing contracting 6 per cent and tourism 20 per cent year-on-year. Farm income growth slowed to just 3-4 per cent year-on-year.
"There is broad agreement that both monetary and fiscal policies should be expansionary as inflation is no longer a problem. And we need to keep our politics steady because the crisis has arrived right at our door," Dr Kobsak said.
He said the government should ensure it has adequate stimulus spending to shore up the economy.
"For now, the government should forego fiscal discipline. And it should begin with accepting the reality that the economy is in a precarious state. Too much is better than too little," he said.
Porametee Vimolsiri, a senior adviser for the National Economic and Social Development Board, said the global economy has deteriorated quickly, with growth in 2009 now forecast at zero to 0.5 per cent compared with a 2-2.5 per cent forecast last November.
"Indicators in October and November, particularly exports, showed that the Thai economy nosedived. Negative momentum has affected production and consumption. People have become more worried about deflation and the economic recession," he said.
Thailand posted an 18 per cent decline in exports in November, compared with a 27 per cent decline for Japan, a 24 per cent decline for Taiwan and an 18 per cent fall for South Korea.
Sethaput Suthiwart-narueput, the president of SCB Asset Management, said there was a good chance the economy could contract this year as the US housing sector was expected to worsen.
"Foreclosures at the end of 2008 were sub-prime loans extended in mid-2005. But the sub-prime loans extended in mid-2006 were said to have lower quality than those in 2005," he said.
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