Thai GDP likely to grow higher than expected: HSBC

BANGKOK, Feb 19 (TNA) – Thailand’s gross domestic product (GDP) will grow 4.6 per cent this year, higher than the 4.2 per cent forecast by many other financial institutions, according to projections by London-based global banking giant HSBC.

HSBC economist Frederic Neumann said the higher-than-expected expansion stemmed from a continued increase in exports and local consumption. It is believed that consumption would play a more active role in recovering the economy because interest and inflation rates remain low and private investment begins to pick up.

Also, the atmosphere for tourism improved as reflected by foreign investor visiting Thailand on a continuing basis, and the number might rise to a new record high.

Although political tensions in Thailand have not subsided, he said, measures in place to contain the problem looked likely to be more effective.

He sees the United States’ Federal Reserve not raising the policy interest rate until mid-2011, but the Bank of Thailand (BoT) might increase the interest rate ahead of the Federal Reserve because it had been pressed by higher inflation rates boosted by increased production and investment.

“We expect the Thai central bank will raise the policy interest rate by around 0.75% in the 3rdquarter of this year. It will fuel the baht strengthening to touch 31.50 to the US dollar by the end of this year.

Because of this, the central bank must try to manage the baht value to boost the export competitiveness,” he said.

He allowed that political disturbances in Thailand are unpredictable as investors are concerned with what would happen next week.

However, he wanted the current government to further manage the economic policy to ensure sustainable growth. (TNA)