Kosit expects Q4 growth to exceed 5%

Business News - Thursday December 20, 2007

ECONOMY / 2008 OUTLOOK

Kosit expects Q4 growth to exceed 5%

DARANA CHUDASRI

Economic growth in the fourth quarter is expected to exceed 5%, according to Kosit Panpiemras, the deputy prime minister and industry minister.

Mr Kosit said that overall growth for the year was expected to break 4.5%, and noted that quarterly growth figures had shown a clear improvement since January.

First-quarter growth stood at 4.2%, rising to 4.3% in the second quarter and 4.9% in the third, according to the National Economic and Social Development Board.

Investment expansion, which was -0.3% in the first quarter and flat in the second, had posted a modest gain of 0.6% in the third and was expected to continue to improve in the fourth quarter.

Mr Kosit, speaking at a conference on economics and small business trends yesterday, said approved projects for investment promotion by the Board of Investment were likely to break the 2001 record and reach 700 billion baht this year.

''But we still need to increase the role of investment in contributing to gross domestic product growth, as this will be the key factor towards building up the country's competitiveness,'' he said. ''And we need to prepare to start this engine to help growth if exports decline.''

In 2008, Mr Kosit said, economic growth could rise to as much as 6% if investment and exports continued to expand.

But Supavud Saicheua, managing director of Phatra Securities, said politics was the main factor that would affect the economy next year.

''From my view, I have a positive view on politics. I believe that we have learned from our past experience and will not return to the old ways,'' he said.

With a more positive, constructive political atmosphere, economic growth could continue strongly through the next two years, he said.

Dr Supavud said Thailand's economic foundation was very strong, with a current account surplus this year projected at $12 billion, or 5.2% of GDP. Domestic liquidity remains plentiful and the government has room to borrow more, he said.

''If politics is stable, foreign investment next year will be higher than this year. But the government must be clear about its position on issues such as the Foreign Business Act, the retail law and telecommunications liberalisation,'' Dr Supavud said.

Economic growth in 2008 should range from 4.6% to 4.7%, with growth accelerating in the second half.

Thanavath Phonvichai, director of the Centre for Economic and Business Forecasting at the University of the Thai Chamber of Commerce, agreed that growth could break 5% next year if the political situation stabilises.

''Public confidence improved in November for the first time in 13 months. We've hit the bottom and are now waiting for a good story,'' he said.

Bangkok Post