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Songkran money circulation likely
to drop, first time in 6 years
The University of Thai Chamber of Commerce (UTCC) last week forecast that
money circulation during the Thai traditional New Year, Songkran, is likely
to fall for the first time in six years thanks to the country’s ongoing
political turmoil.
If political tensions continue, but without violence,
cash in circulation is expected to be less than Bt97 billion, down 1.49 per
cent from the same period last year, according to Thanawat Polvichai,
director the UTTC’s Business Forecasting Center.
Meanwhile, if the situation becomes chaotic, spending is
projected to drop by Bt4 billion to some Bt93 billion during the holiday, a
sharp drop of 4.67 per cent.
According to the survey of 1,213 respondents conducted
between March 31 and April 4, the slump of cash flow will be at a record low
for the first time since 2005.
During the traditional Songkran festival starting on
April 13, the economy usually grows by 4-5 per cent. The Business
Forecasting Center estimated the country may lose some Bt7-8 billion during
this year’s holiday.
Nearly six in 10 respondents - 58.4 per cent of those
polled - said they would not travel anywhere, while of those with travel
plans, 89.6 per cent plan to celebrate the traditional new year festival
within Thailand, according to the UTCC survey. (TNA)
World Bank forecasts
6.2% Thai GDP growth
The World Bank last week projected the Thai economy could
grow 6.2 per cent this year, up from its earlier forecast of 3.5 per cent, due
to clear signs of the recovery of the global economy.
“All in all, a more favourable external environment should
help boost real GDP growth to 6.2 per cent in 2010,” the bank said in its East
Asia and Pacific Economic Update.
“Thailand’s fiscal and financial picture is solid. The fiscal
deficit is modest, public debt manageable, foreign exchange reserves much higher
than before the crisis, and the financial sector is sound and well regulated,”
said the report.
The slower-than-expected implementation of the
infrastructure-focused second stimulus package should help limit the fiscal
deficit to 2.2 per cent in 2010, from 4.4 per cent in 2009. Government debt is
projected to decline to about 44 per cent of GDP from 45.2 per cent in September
2009. Foreign exchange reserves, already equivalent to 13 months’ import cover,
should rise further as the current account remains in surplus, the report said.
However, the World Bank warned that “the upside is limited
due to political and regulatory uncertainty, including from possible political
violence and the Map Ta Phut court case. The government investment plan is
proceeding at a slow pace, but public investment should contribute to growth.
Overall domestic demand should provide a positive but limited contribution to
growth.”
This year’s inflation is likely to drop owing to sluggish
domestic demand while interest rates are expected to rise gradually during 2010.
The tight labour market can be a risk factor, which can affect inflation.
Private companies reported difficulties in recruitment and more dependency on
foreign labourers, said the report.
The central bank is likely to continue to limit the exchange
rate appreciation amid concerns that the country will lose competitiveness
against China, given that the renminbi has been effectively re-pegged to the
dollar since mid-2008, the bank said in its report. (TNA)
Mitsubishi Motors to produce eco-cars in Thailand next year
Mitsubishi Motors (Thailand) affirmed its intention to
invest and produce eco-cars in Thailand, starting in September 2011.
Secretary-General Atchaka Sibunruang of Thailand’s Board
of Investment (BOI) said after discussing with Nobuyuki Murahashi, president
of Mitsubishi Motors (Thailand) and Gayu Uesugi, product strategy and
development director of Japan’s Mitsubishi Motors Corporation, that the
Mitsubishi eco-car project in the country would launch its first eco-vehicle
in the market in March 2012.
She added this was the first time BOI and Mitsubishi
executives, both from Thailand and Japan, have met.
“Not only did this discussion confirm the progression of
the project’s investment, it was a good opportunity that BOI and Mitsubishi
can exchange information and details concerning the scheme,” said Atchaka.
A new platform for manufacturing eco-cars developed by
Mitsubishi Motors Corporation (Japan) will be applied to automobiles to be
produced in Thailand. Production capability planning is expected to be
according to BOI’s conditions and standards where at least 100,000 cars must
be manufactured annually.
The first phase of the operation will be carried out by
Thai Mitsubishi producing cars by adjusting the production line in the
company’s existing factory at Chonburi’s Laem Chabang Industrial Estate, but
the firm says it is prepared to consider building a new factory if there is
a possibility that eco-cars are in higher demand in the market.
Mitsubishi Motors (Thailand) applied for BOI project
approval for eco-cars in November 2008 with project investment funds of some
Bt8 billion and also in the hope it would create employment for over 1,500
workers. (TNA)
Foreign capital continues
flowing into Thai stock
and bond markets
Bank of Thailand (BoT) Deputy Governor Bandid Nijathaworn
says that foreign capital continues to flow into Thailand’s stock and bond
markets, showing that liquidity remains high overseas and that foreign investors
are confident of investing in Asian countries, including Thailand.
He said foreign investors believe asset prices in Asia would
increase due to the continued economic recovery of the region.
Investors were also satisfied with the improved economic
fundamentals of Thailand as could be witnessed by a continued increase in local
production and consumption.
The country’s exports have also risen without interruption in
terms of value due to the global economic recovery and higher farm product
prices.
Bandid said loans from commercial banks to the private sector
are expected to continue growing this year and that employment is set to
increase. These factors will contribute to Thailand’s economic recovery.
Regarding an increase in the general and core inflation rates
to 3.4 and 0.4 percent respectively in March, Bandid said it stemmed from the
continued rise in product prices, particularly in the food sector, and the
strong economic recovery.
However, the core inflation rate is expected to remain at a
low level for now, Bandid said, since higher inflation has not yet deterred
Thailand’s economic expansion.
“The current inflation rate has not accelerated so rapidly
that it can affect the economy, which is in a path of strong recovery. However,
the Monetary Policy Committee will take into account the latest economic data,
agriculture prices, the lifting of state economic stimulus measures, and global
oil prices for its decision on the monetary policy,” he said. (TNA)
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