World Bank predicts Thai growth at 4% this year, blames political impasse

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BANGKOK, Feb 11 – Thailand’s economic growth this year is forecast at 4 per cent thanks to strengthened global economy which will contribute to a 6 per cent export expansion, a Bangkok-based World Bank executive said today.  

Urich Zachau, World Bank country director for Thailand, said reimbursement for public investment will be delayed if a fully-authorised government is not formed in light of the political impasse, resulting in lower-than-projected economic growth.

He said the World Bank would continue to monitor the situation in Thailand for future assessment but believed that the chance of economic recession in Thailand is low despite the political vacuum.

Kirida Bhaopichitr, World Bank senior economist, said the Thai economy expanded only 3 per cent last year, and 1.3 per cent in the fourth quarter.

Exports, household consumption, investment and public spending have slowed down as a result of the political risk, she said, adding that the negative impacts, though not affecting macro economy, will diminish tourism growth from 20 per cent last year to only 10 per cent this year.

She said political uncertainty has led to inconsistent public policy and delay in state projects.

The government’s less emphasis on long-term development policy will result in this year’s public investment at only 4.2 per cent while private investment will increase by 5 per cent, said Ms Kirida.

She said Thailand, with a good public utility system and infrastructures, has remained attractive among foreign investors, based on high investment privileges granted by the Board of Investment.

The lesser consumption, due to the political stalemate, withdrawal of the government’s measures on economic stimulation and rapid expansion of household debts, has increased domestic consumption at only 2.1 per cent.

Private consumption grew only 1.8 per cent and public consumption at 3.5 per cent.

Despite an export volume at US$238.9 billion or a 6 per cent growth, Thailand has lagged behind other countries in the region which have enjoyed favourable growth from global economic recovery, she said.