Thai economic figures for January 2011 reflected quite healthy growthas seen in both domestic spending and exports. However, the current situation and economic trend for the coming months may pressure Thai economic indicators to point out mixed directions. The prices of many commodities tend to rise in line with the surge in manufacturing cost and energy prices, thus dampening domestic spending atmosphere.
As for our economic forecast for 2011 at 4.0-5.0 percent, this figure was estimated based on the above risk factored. However, if the current political turmoil in Arab region is prolonged, resulting in rising oil prices in the global market for much longer, risks of the Thai economic downward trend, with rising inflation risk will likely prevail. Economic growth may drop to 4.0 percent, at the lower limit of our forecast. Meanwhile, Headline Inflation could surge close to 5.0 percent. In such an economic environment, further BOT tightening of monetary policy could face complex economic challenges.
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