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IMPACT Exports likely to be hit if US slows down

January 11, 2008

Exports likely to be hit if US slows down

Thailand's exports are unlikely to enjoy a 2-digit growth this year if the sub-prime mortgage crisis in the United States continues to deteriorate, according to a leading academic.

Dr Somjai Phagaphasvivat, an independent academic on the capital market, projected the overall Thai economy this year would grow 4.5-5 per cent -- close to that of last year -- on the assumption that the sub-prime lending woes would not escalate.

He said should the sub-prime problem worsen, it would affect the American people's purchasing power.

It would make the Thai exports grow below the target set earlier at 10 per cent.

He predicted the Stock Exchange of Thailand will remain volatile in the first and second quarters of this year. The situation might persist until the third quarter of the year.

Dr. Somjai predicts the baht will strengthen further although the Bank of Thailand will attempt to oversee the currency to ensure it moves at a level at which exporters could compete.

Unless the central bank intervened in the baht movement, he said, the currency might appreciate to 31 to the US dollar.

Factors that could make the baht further strengthen include the sub-prime lending meltdown and high oil prices.

The inflation rate is expected to stay at 3 per cent this year as global oil prices could break through the level of $100 per barrel and an interest rates could rise by over 1 baht.

Courtesy TNA

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