In 2008, the Thai economy is expected to grow by 5.6% due to strong exports, which will become more competitive as the baht currency weakens, the finance ministry said June 25.
The forecast puts the Thai economy in a stronger position than last year, when the economy grew by 4.8% one of the weakest rates in Southeast Asia, said Pannee Sathavarodom, head of the ministry's fiscal policy office. "The persisting momentum from the first quarter growth of 6%, plus growing foreign demand and likelihood that the baht currency will weaken beyond expectations will contribute growth over the next year," Pannee said.
The value of Thailand's exports is expected to grow by 20.3%, while import growth is seen rising by 30%, due mainly to rising oil prices and increased domestic demand, she said.
"Private consumption and investment are likely to recover next year, but higher inflationary risk, rising interest rates and lower confidence among consumers and investors may slow the recovery," she said.
Consumption and investment slowed last year due to political instability and doubts over the economic management of the junta that ran the country after toppling former prime minister Thaksin Shinawatra in a coup in 2006. Elections in December restored democracy, but anti-government protests have broken out, again alarming investors.
Thailand, like many countries, is grappling with rising inflation due to higher food and fuel costs.Inflation this year is seen at 7.2%, compared with 2.3% last year, Pannee said.
Copyright Agence France-Presse, 2008