Thursday, November 13, 2003
Thai PM says economy to surge in next two years
Reuters Bangkok, November 13
Thai Prime Minister Thaksin Shinawatra said on Thursday his 2004 economic growth target of eight per cent was "not too difficult" for one of Asia's fastest-growing economies and he set a 2005 target of 10 per cent.
Thaksin, who did not elaborate on what would power economic growth in the next two years, said he had set high growth targets to motivate Thais to work harder, but some economists were sceptical.
"I am confident that eight per cent growth is not too difficult," Thaksin said in a nationally televised speech outlining his economic vision for 2004.
"I set targets so everyone will have drive to work towards that goal," he said, then announced his 2005 growth target at an even higher 10 per cent.
"I don't want people to be surprised, but I intend to see 10 per cent growth in 2005 -- that's my target."
Some economists questioned his targets. "It's the 'how' that's important," said managing director of Merrill Lynch Phatra Securities, Supavud Saicheua.
"It basically means you have to grow 20 per cent in the next two years based on current GDP. That's tough. It has to be sustainable and I don't think the economy will grow 10 per cent in 2005," he said.
Merrill Lynch expects Thai economic growth to slow in 2004 to 5.5 per cent from 5.7 per cent this year on weaker export growth due to a stronger baht and moderating expansion abroad, such as in China and the United States.
STRONG EXPORTS, CONSUMPTION
Thailand's economy has grown strongly over the past year on the back of resilient exports and robust domestic consumption, prompting government and other private economists to forecast GDP growth of 6.3 to 6.5 per cent in 2003.
The economy grew 5.3 per cent in 2002, the first time it returned to levels seen before the 1997-98 Asian crisis.
But fearing a strong baht would stymie strong growth in exports, Thailand has laid down anti-speculation measures to prevent its currency from rising too fast.
The baht, which has appreciated around seven percent against the dollar this year on an influx of foreign funds drawn by the surging economy, was at 39.890/920 to the dollar at 0410 GMT.
Thaksin, however, said the baht was unlikely to weaken beyond current levels due to Thailand's "strong economic fundamentals" and rising trends in interest rates.
"A lot of money has come in, buoying the level of the baht," he said. "But we will try to make sure exports stay competitive."
Thaksin's are not the only bullish projections for Thailand.
Goldman Sachs recently raised its 2004 GDP forecast to eight per cent from 6.1 per cent and said Thailand was at the beginning of a six-year growth cycle driven by a recovery in business investment as spare capacity was used up.
That investment was likely to drive growth in consumption as wages rise, it said.
With household debt levels rising around 40 per cent in 2002, still below South Korea and Malaysia, analysts see room for more consumption growth.
But with 60 per cent of Thai GDP still dependent on exports, an uncertain outlook on the global economic front could spell difficulty for Thai exports -- which the Commerce Ministry says should grow 12 per cent this year -- in the near future.
Merrill Lynch's Supavud said he saw eight per cent export growth in 2004, down from an expected 13 per cent this year.
© Hindustan Times Ltd. 2003.