The continuing political turmoil has affected the economy and could trim gross domestic product (GDP) for 2013 to below 3%, Finance Minister Kittiratt Na-Ranong said on Friday.
Mr Kittiratt, also deputy premier for economic matters, suggested the central bank should oversee the currency to ensure it stays below 32 baht to the US dollar, to spur exports in the remainder of the year.
The anti-government rallies have affected economic growth in the fourth quarter, which is the main period that boosts expansion every year, particularly in the tourism sector, he said.
This was evidenced by the fact that GDP growth in the first three quarters of 2012 stood at only 3%, but a substantial expansion in the fourth quarter had pushed up last year’s final growth figure to as high as 6%, he added.
The minister projected GDP growth for 2014 at about 4% on the back of government budget spending, starting from October, and investment in the planned 350 billion baht water and flood management project, which will began next year.
He said the government had already prepared everything for the planned investment in the 2-trillion baht infrastructure development megaprojects and these projects can be started once the borrowing bill passes all necessary procedures.
The infrastructure overhaul will help spur economy since its beginning and after completion. Moreover, these projects will strengthen the country logistics, enhancing sustainable economic expansion, said Mr Kittiratt.
He thought the baht’s current depreciation to about 32 baht, from over 28 baht to US dollar, is a suitable level to enable exporters to stay competitive. The exchange rate should be kept at this level to spur exports for the remainder of this year and also next year.
Asked whether he thought the central bank’s monetary policy committee left it too late to cut its key policy rate by 0.25 percentage points to 2.25% on Wednesday, Mr Kittiratt said only that it was better late than never.
On the foreign investors taking net selling positions in the stock market, the minister said it was caused mainly by the impact of the political turbulence.
Foreign investors were concerned about the protesters laying siege to state agencies. If they moved out of state office building compounds, foreign investors would feel more comfortable and return to the Thai capital market, he added.