November 1, 2007
THAILAND : Economy
BoT confident 2008 economic growth to outpace 2007
Bank of Thailand Governor Tarisa Watanagase on Wednesday expressed confidence that the Thai economy next year will expand more than this year's performance, despite mounting concerns over the continued rise of oil prices and the weakening US dollar because private investment has begun to show signs of recovery.
Although the greenback will depreciate and the US economy will be in recession, she said, such developments would not adversely impact on the Thai economy.
Mrs. Tarisa predicted the Thai economy would grow 4.5-6 per cent next year since local economic activities, particularly private investment, had begun to recover.
Many investment projects including those in the Map Ta Phut industrial zone had gotten off the ground although the electric mass transit rail project construction had not yet been implemented.
When the local economy begins to improve, she said, domestic demand will increase accordingly. Then, the private sector would start importing more capital goods and machinery for production expansion.
However, Mrs. Tarisa conceded there are external factors beyond Thailand's ability to control that need to be monitored, such as global oil price rises and the weakening of the US dollar against Asian currencies, including Thailand's baht.
She said the central bank will try to closely supervise the baht to ensure it moves in parallel with currencies of Thailand's neighbours, so that the country will not lose its export competitiveness.
The central bank chief revealed the foreign direct investment in the first eight months of this year totaled US$5 billion, down from $8 billion in the same period last year, since no commercial banks had raised their capital in that period.
"We still have closely monitored external factors such as oil prices and the weakening dollar. Regarding local factors, we do not worry, because the general election has already been set for December 23 and private spending has begun to improve," she said.
Regarding the foreign capital inflow, the BoT chief said that more capital had flowed into the Thai stock market, but not in a large amount.
She admitted foreign capital had flowed into the secondary market in a smaller amount since the central bank imposed a 30 per cent reserve requirement and a fully hedged measure.