European debt crisis may limit Thailand's GDP growth in 2012

BANGKOK, June 19 (TNA) - The Kasikorn Research Center (KRC) predicted Tuesday that the ongoing European debt crisis, if limited, would allow the Thai economy to grow at a high level this year, but if serious, it would limit Thailand's gross domestic product or GDP growth to only 1.8 per cent. The leading Thai private think tank projected that the Thai economy could grow by 4.5-6 per cent or around 5 per cent this year, taken results of Greece's latest general election last Sunday into account. The Bangkok-based research firm said it considers the European debt crisis the biggest risk factor most probably affecting the world economy, anticipating if Greece successfully discussed its debt restructuring, the Thai economy would expand by 5 per cent this year but if the negotiation failed and led to default, the Thai economy would grow by 4.5 per cent in 2012. In the worst case, the KRC indicated, if lack of confidence, caused by the debt crisis, expanded from Greece to other European countries, Thailand's economic growth would stand only at 1.8 per cent this year. For direct impacts on the Thai economy, the KRC cautioned that the European debt crisis would reduce Thai exports, pointing out that Thailand's shipments to overseas markets had fallen by 15.4 per cent year-on-year during the first four months of this year and the decline should be some 5 per cent on average this year, although there has not been any serious impact on Thailand's tourism and investment. For indirect impacts, the KRC acknowledged if banks in Europe lost their credibility, debts which Europe's trading partners have had with Thai exporters might become default, warning that Thai exporters take precaution and keep monitoring fluctuations in global foreign exchange rates. Meanwhile, Aat Pisanwanich, Dean of the School of Economics at the Bangkok-based University of the Thai Chamber of Commerce, said that in the worst-case scenario of the current financial crisis of European nations, including Portugal, Ireland, Italy, Greece and Spain, also called the PIIGS group, the total value of Thai exports could even plunge by 17 per cent or about 150 billion baht, with Thai products to be heaviest affected including rubber, rubber products, electrical appliances, gems and garments. Besides, tourist arrivals in Thailand from the eurozone would also drop. Last year, the total value of Thai exports to the eurozone was estimated at 700 billion baht, accounting for some 10 per cent of the overall Thai export value. Aat foresaw that it should take 3-5 years to solve the the eurozone's debt problem. (TNA)