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Thai central bank lowers projected growth for 2008, 2009


July 29, 2008

Thai central bank lowers projected growth for 2008, 2009

Soaring oil prices plus slow recovery in public consumption and investment, together with rising inflation, have forced the Bank of Thailand (BoT) to lower its estimate of the country's projected gross domestic product (GDP) for 2008 and 2009, Thai News Agency quoted a senior BoT official as saying Monday.

BoT assistant governor Duangmanee Vongpradhip said the central bank had lowered its growth projection for 2008 to between 4.8-5.8 percent from a 4.8-6 percent projection made in April.

Also, the GDP projection for 2009 is also lowered to 4.3-5.8 percent from 4.5-6 percent due to those negative factors which had depressed consumer confidence which had caused less spending by the private sector, according to Duangmanee.

Stressing that the government package of eonomic relief six measures -- most of which will be implemented Friday -- would only cushion the public hardships resulted from rising inflation, she said the measures would only help boost economy around 0.1-0.3 percent in two years because the measures would last only six months.

Core inflation had already exceeded the target of  0-3.5 per cent for the first time after the central bank announced its core inflation target in 2000,  she said.

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The central bank has adjusted the core inflation upward to between 2.8-3.8 percent from an earlier projection of 1.5-2.5 percent, inflation between 7.5-8.8 percent from an earlier estimation of 4-5 percent.

For 2009, core inflation is projected at 3-4 percent and inflation at 5-7.5 percent. Duangmanee said an expected sharp increase in core inflation from the planned target has resulted from an uncontrollable external soaring global oil price which has affected commodity prices.

The BoT will implement stricter monetary policy to "control core inflation from not rising above 3.5 percent within the next eight quarters," she said.

Consumption this year is expected to grow 3.4 percent, investment between 4.3-5.3 percent, exports 16-19 percent and imports 27-30 percent. The BoT has projected that the country would suffer a trade deficit of around $1.5-3.5 billion while the current account would enjoy a surplus of between $1-4 billion in 2008.

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