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11 Jan 2011

Thai Economy

Improving Global Economy and Thai Economic Stimuli Measure: Key Factors Driving 2011 GDP to grow 4-5% (Business Brief No.3023)

Although in 2011 the Thai economy will likely decelerate from relatively high growth in 2010, there are some factors that may help reduce concern toward economic risks in 2011, such as Thai and global economic figures for the remainder of 2010 that were better than expected and the way that Thai government has launched ‘Pracha Wiwat' program, a new economic action plan, to increase spending and news of a decision to proceed with general elections this year.
Due to this more positive point of view toward the economy, KResearch expects that our growth in 2011 will be more satisfactory than the former forecast, so we have decided to increase our forecast to 4.0-5.0 percent, from our previous 3.5-4.5 percent estimate. Although the economic situation seems better than expected, there are some remaining challenges that should be closely monitored, such as a need for greater stability in global economic growth. Although the US economic recovery is looking healthier, the speed of their recovery there has not been fast enough to help reduce unemployment and the Eurozone debt crisis is still a threat. Meanwhile, inflation may pressure the Bank of Thailand to increase their key policy rate and the domestic political situation will likely be a determining factor affecting government economic policies and private sector confidence.

Looking toward the future business environment, challenges to Thai businesses include higher costs, such as in labor and interest rates, as well as raw materials and fuel prices. It is expected that we may see another surge in global crude oil prices over the level of USD100/bbl. Moreover, forex rates will likely remain volatile, as seen from recent Baht appreciation. Therefore, businesses should brace for any risks that may arise in the future.

Thai Economy