Thai economy believed to grow by 5% in 2012

BANGKOK, January 31 (TNA) - Bangkok Bank Public Company Limited projected Tuesday that the Thai economy should expand by 5 per cent this year, based on normal domestic political developments. Kobsak Phutrakul, Bangkok Bank's executive vice president for the international banking group, said today that the Thai economy grew by only 1.8 per cent last year due to impacts from massive flooding but the national economy should grow by some 5 per cent on average this year, thanks to spending on flood-related repair and rehabilitation in the local private sector and lending by government and private financial sources in the first half of this year. Kobsak assessed that in the second half of 2012, the Thai economy would depend on investment from the Thai government and local and foreign business operators, with the government's mega-investment projects to be focused on water management worth 300-350 billion baht and future-oriented infrastructure development worth about 2.3 trillion baht, as well as an offer of soft loans to local people and businesses worth 300 billion baht. Kobsak acknowledged that there remain risk factors against the Thai economy this year, including, probably, a renewed economic crisis in Europe, as the European economy now grows by only 0.2 per cent and it may experience a recession; while its fiscal problems are spreading to other indebted nations with moderate economic growth and moderate-to-high deficits, cautioning if the problems reached the banking sector, they would spread more quickly and forcefully and also affect Thailand's economic growth, resulting in the country's gross domestic product (GDP) to, probably, grow by lower than 5 per cent. According to the executive vice president, the Bank of Thailand (BOT)'s key interest or repurchase rate should stand at 3 per cent until the end of this year if economic problems in Europe remained stable, but if the European economic woes deteriorated, the BOT's repurchase rate should be further cut. The executive vice president said if the European economy was weaker, international investors would widely buy US dollars and Thai baht would depreciate, suggesting local business operators to, therefore, plan their risk management well, noting that foreign exchange rates are fluctuate wildly, with the value of the Thai baht now ranging between 31-33 baht a US dollar and even between 31-31.90 baht a US dollar last week. The Bangkok Bank's executive foresaw that the Thai economy will benefit from the establishment of the ASEAN Economic Community (AEC )by 2015, as Asia is playing important roles in the world economy and is attracting more foreign direct investment (FDI). (TNA)