IMP sees 2-4% contraction in Thai economy
Thailand's economy will contract sharply this year, largely because of the global recession, and low inflation gives it room for further interest rate cuts, AFP quoted the International Monetary Fund assaying Monday.
In a statement summarising its 2009 consultation with Thailand, the IMF said the Bank of Thailand had "reacted appropriately" by cutting interest rates by 225 basis points since last December, but said there was scope for more.
"Supportive fiscal and monetary policy will be needed to limit the contraction in consumption and investment," the IMF said. "Assuming that there are no major shortfalls in policy implementation, and that political stability is maintained, the fall in GDP growth could be contained to a range of between -2 and -4 percent."
According to Nissanke Weerasinghe, an IMF adviser for the Asia-Pacific region, GDP is forecast to return to positive territory, growing 1 percent, but this will depend a lot on recovery in the US, the European Union and Japan.
The IMF official, who headed a consultative mission to Thailand, said US economic recovery was expected in the middle of 2010. The IMF has endorsed the Thai government's economic stimulus measures, which will lead to a budget deficit of 4.5 per cent of GDP in the next few years.
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