ASEAN KEY DESTINATIONS
Post-election investment in Thailand
"My view is that it's now a good time to consider Thailand again, because I think there's reasonable hope for more political stability," said Joseph Ferrigno III, managing partner of Hong Kong-based direct-investment fund manager Asia Mezzanine Group.
According to the Hong Kong and Shanghai Banking Corporation (HSBC)'s Asian Economics Report, hope is building that Thai politics will return to normalcy and parties on both sides of the divide will accept the results of the coming election.
HSBC forecasts that the Thai economy will expand by 4.9 percent this year, possibly supported by domestic demand and strong export growth. Next year's economic growth could reach 5.7 percent, it said.
In 2011, private consumption could grow by 3.5 percent year on year, while government consumption will likely expand by 5.3 percent. Investment is estimated to rise by 5 per cent. "Increasingly, investment activities may also become a more active contributor to [Thailand's] economic growth this year, particularly if a successful conclusion to the election chips away at the political overhang that has afflicted the country for a while now," the HSBC report said.
The country's long-time economic engine, exports, could continue its upside, with a year-on-year growth rate of more than 20 per cent, particularly from strong exports from the auto industry.
Despite a short-term fall in some sectors, as a result of supply disruption from Japan, Thai exports and investment could pick up quickly after the probable relocation of auto-makers from Japan to Thailand.
HSBC expects inflation, which is relatively tame at present, to pick up in coming months after likely increases in product prices and the end of the government's diesel subsidy. Inflation could rise by an average 4 percent and reach 4.4 percent by the end of the year.
HSBC said the Bank of Thailand was likely to continue its interest-rate normalisation. It projected the addition of at least 50 basis points to the policy interest rate, raising it to 3 percent by the end of 2011.
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