BoT: 2014 growth of 4% ‘possible’
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BoT: 2014 growth of 4% ‘possible’

Thailand’s 2014 economic growth could still reach 4% if the government’s budget disbursement is fully made and domestic consumption and confidence in the country improve in the second quarter of the year, the central bank said.

Rung Mallikamas, spokeswoman of the Bank of Thailand (BoT), said on Wednesday that there is a possibility the Thai economy would grow by up to 4%, as recently forecast by the World Bank.

She said the projection was based on conditions that the government’s budget disbursement must be fully and effectively made and the confidence of consumers and investors improves and economic activities in the private sector increase in the second quarter or in the second half of the year at the latest.

Both private sector and commercial banks now have strong financial status and are ready to increase their investment when the political situation returns to normal, she added.

Domestic consumption is also expected to rapidly increase, particularly the spending on non-durable and consumer goods, which accounted for 75% of the total consumption, said Mrs Rung.

The consumption of durable products, such as homes and vehicles, was projected to recover at a slower pace as their loan terms would be five years or more, she said.

A rapid recovery in the tourism sector is also expected because most foreign tourists visiting Thailand are Asian people who have only a short-term touring plan. Once the political turmoil ends, they would return to Thailand,  the central bank’s spokesperson said.

The recovering global economy would also help boost Thailand’s exports, projected to grow by 7% this year, and it will be a main factor in enabling better economic growth than recorded last year, she said.

Mrs Rung said the central bank’s key policy rate is likely to be further eased to support economic expansion, due to overseas risk factors.

Moreover, the competition for deposits among commercial banks would be less intense than last year because of a slowdown in their lending expansion and their deposit rates would still be relatively low as a result, she added.

A factor that should be closely watched is household debt, which would increase due to the delays in payments to farmers who pledged crops under the rice scheme, but this is not an alarming signal, the spokeswoman said.

On concerns of a possible substantial foreign investment outflow after the new US Federal Reserve chief Janet Yellen declared she would continue implementing policies of the former FED chief,  Mrs Rung did not expect much change.

The money market would gradually adapt to it, even though foreign investment was withdrawn from the newly emerging markets over the past months.

The capital outflow was in line with  previous expectations because once the developed countries implemented their quantitative easing measures, a huge amount of capital had flown in to the emerging markets. It was normal for the excessive foreign capital to now flow out, she said.

She believed that in the long term, foreign investment would return to the newly emerging economies where economic growth rates are higher than the developed countries.

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