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Thai economy likely to grow more slowly in 2nd half


August 2, 2008

Thai economy likely to grow more slowly in 2nd half
Thai economy is expected to grow at a slower pace in the second half of this year as production and living costs have increased while political uncertainty continues, according to the Bank of Thailand (BoT).

Thai News Agency (TNA) on Friday quoted Amara Sripayak, BoT Local Economy Division senior director, as saying that the Thai economy in the second half of this year is projected to grow some 6 percent, boosted by a continued increase in the private-sector spending from the first quarter.

The private investment and consumption indices increased 4.2 and 6.9 percent respectively in the second quarter, but confidence among consumers and businesspersons continued to slow down due to higher production and living costs.

Amara revealed that the business confidence index in June dropped to 40.9 from 43.9 the month before and that the confidence index in the six months ahead stayed unchanged at 44.2.

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The central bank viewed the economy in the second half of the year as remaining engulfed with internal and external risk factors including higher oil prices, surging inflation rates, political uncertainties, global economic slowdown and the impacts of the sub-prime lending crisis in the United States.

However, state spending, relief measures to ease people’s hardship from higher living costs, increased exports, substantially higher agricultural product prices would help drive the local economy ahead.

She said the general and core inflation rates had accelerated in the second quarter to stay at 7.5 and 2.8 percent from 5 and 1.5 percent in the first quarter as the rates in June increased to 8.9 and 3.6 percent respectively due to higher product prices.

Exports in the second quarter totaled $45.07 billion, up 26.3 percent, and imports amounted to $44.65 billion, up 29.3 percent, resulting in a trade surplus of $425 million.

But the current account balance was in deficit of $308 million since there were more remittances in a form of profits and dividends by the private sector.

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