PM 7 percent growth dong won’t hurt economy

PM 7 percent growth  dong won't hurt economy

National Economic and Social Development Board secretary-general Ampon Kittiampon met the prime minister to report the latest economic figures today.

“Most people are now expecting that this year’s economy would grow seven per cent from their previous forecasts at 3.5, 4.5 and six per cent.

“I’m quite sure the economic growth in the first half of the year will be above 10 per cent,” Mr Abhisit said.

It would not be unusual if the economic growth slows down in the second half of the year, he said. 

The government was more concerned about the economy in the first quarter of 2011, as the agricultural sector could be hit by potential water shortages.

The premier said Mr Ampon reported that the baht’s recent appreciation was in line with other regional currencies.

On the economic impact from the devaluation of Vietnam’s dong, he said the inflation rate must also be taken into account.

The devaluation of the Vietnamese currency was low since the neighbouring country also needed to tackle its inflation problem, he said.

“The government is not underestimating the foreign exchange situation but the dong’s devaluation would unlikely affect the Thai economy,” he said.

Commerce Minister Porntiva Nakasai said the dong’s devaluation by another two per cent early this week will not have any appreciable impact on Thailand’s rice exports.

“Vietnam is a major competitor for rice exports, but our neighbour now has no more rice for sale,” Mrs Porntiva said.

The ministry would keep a close watch on the situation, particularly on the value of baht. The private sector had repeatedly expressed concern about its appreciation, she said.

The private sector was worried that the baht might strengthen to 30 to the US dollar, a rise of seven to eight per cent.

Businesses warned that such an appreciation would affect the country’s exports in the fourth quarter of the year, she said.

The minister was confident that the Bank of Thailand was capable of keeping the baht value at a suitable level, and said her ministry forecast that 2010 exports would grow 20 per cent to an expected value of $183 billion, as targeted.

Thai Chamber of Commerce chairman Dusit Nonthanakorn said there is a possibility Vietnam would again devalue the dong soon, although this would not have much impact on Thailand’s exports.

“But the government must keep a close watch on the situation and try to stabilise the baht value at levels in line with the currencies of other Asian countries. By doing this, manufacturers’ trade competitiveness will not suffer,” Mr Dusit said.

Federation of Thai Industries (FTI) chairman Payungsak Chartsuthipol said the Thai Industries Sentiment Index (TISI) rose from 103.3 in June to 108.6 in July.

The TISI figure, which was again above 100, reflected the fact that manufacturers had more confidence in the recovering economy, the FTI chief said.

He attributed the improvement to the increase in purchase orders, sales volume, production output and profit of manufacturers, enhanced by recovering global economy and the end of political unrest.

Manufacturers’ confidence was also boosted by the progress in the national reconciliation road map of the prime minister, the success of the government in injecting seed money into the system via investment projects under the Thai Khem Kaeng (Strong Thailand) stimulus scheme, and the substantial expansion in the export and production sectors, said Mr Payungsak.

However manufacturers were concerned about global oil price fluctuations, the political situation, the world economy, foreign exchange rates and domestic interest rates.

He said manufacturers wanted the government to rapidly bring stability to politics, boost the confidence of investors, cut tax to stimulate the economy, cut loan rates, settle the environmental impasse at Map Ta Phut industrial estate, seek new export markets and stabilise value of the baht.

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