The Thai Economy in 2012 and Economic Outlook in 2013

(28/12/2012)

The Thai economy in 2012 is expected to grow by 5.7 percent, while economic growth in 2013 is likely to continue at a rate of 4.5-5.5 percent. The Director-General of the Fiscal Policy Office, Somchai Sujjapongse, said that increased private sector consumption and investment contributed to the 2012 economic growth. The Government’s economic stimulus policy has also led to higher domestic spending. Inflation in 2012 is likely to stand at 3 percent, a decline from 3.9 percent registered in 2011. Private sector consumption is expected to grow by 5.6 percent because of the recovery of the production sector and better employment situation. Private sector investment is likely to grow at a high rate of 16.1 percent, because more construction and purchase of machines were seen after the flood damage in late 2011. At the same time, entrepreneurs have expanded their production capacities to cope with domestic economic growth. According to the Fiscal Policy Office’s forecast, public sector consumption in 2012 would grow by 6.7 percent, while public sector investment would expand by 8.5 percent. Exports are likely to decelerate because of impacts from the slowdown in the global economy and the eurozone debt crisis. Agricultural exports are expected to fall, as a result of the decline in rice exports. As for outlook in 2013, the Fiscal Policy Office believed that public sector investment would grow by 14 percent. The Government’s investment of 350 billion baht under its long-term water management plan would be a supporting factor to spur the economy. Public sector consumption is expected to grow by 3.5 percent. The recovery of the world economy in 2013 would help boost Thai exports. Exports of products and services are likely to grow by 6.6 percent, while imports are expected to grow by 5.6 percent. Private sector consumption in 2013 is likely to grow by 3.9 percent, while private sector investment would expand by 9.2 percent. Household income is expected to increase because of the Government’s economic stimulus measures, especially the implementation of the 300-baht minimum wage across the country and the rice-pledging scheme. Inflation in 2013 could remain at 3 percent, since global oil prices are expected to decelerate because of more supply from the United States. However, natural disasters, such as floods and drought, might lead to higher prices of grains in the world market. As a result, production costs for animal feed would be higher, thus leading to higher costs of meat. The unemployment rate is likely to be at a low level, only 0.6 percent. Meanwhile, the Deputy Prime Minister and Finance Minister, Kittiratt Na-Ranong, said that the Thai economy in 2013 would grow well and enjoy stability, with a growth rate of at least 5 percent. So there would be no need to introduce economic stimulus measures, except for measures to improve the people’s quality of life.