Thai GDP lowered to 4.2% responding to volatile global market

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BANGKOK, July 23 – The reduction of Thailand’s 2013 gross domestic product (GDP) goal by the Monetary Policy Committee (MPC) from 5.1 per cent to 4.2 per cent is realistic and in accord with the regional economy and export slowdown, central bank governor Prasarn Trairatvorakul said today.

He said the government’s stimulus through investment for mega infrastructure projects will contribute to the country’s economic efficiency in the long run and possibly bring next year’s economic growth back to 5 per cent.

Thai economic growth has slowed in the last decade, from a GDP expansion of 8-9 per cent to slightly over 4 per cent given the labour shortage and lack of new innovation which has negatively impacted the manufacturing sector, Mr Prasarn said.

He called on the government to give more emphasis to developing production efficiency to boost the country’s competitive edge, indicating that monetary policy alone was insufficient to drive economic growth.

The Bank of Thailand governor warned that the Thai economy in the second half of the year remains volatile in tandem with the global market, especially when the attempted economic solutions of the US and European countries have yet to totally revive stagnation.

The central bank is equipped with mechanisms to monitor capital inflows and outflows but the mechanisms must be used at the right and appropriate timing, or they could affect the overall economy, he said.

He gave assurances that Thailand’s economic fundamentals remain solid with strong international monetary reserves but “we have to keep a close watch on the situation as the market is sensitive to any announcement by the US Federal Reserve on an adjustment of quantitative easing.”