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We’re moving to Thailand now， where the second quarter GDP grew a healthy 3.3 percent from the previous three months, as the country continues to recover from last year’s devastating floods. Many economists believe that the Central Bank will leave rates unchanged at 3 percent. Our correspondent Dusita Chumsri reports from Bangkok.
Thailand is, in these tough times looking something like an economic success story. Less than one year after flood waters ravaged two thirds of the country killing over 800 people and devastated large sectors of industry, things are looking better for the future. And the numbers back it up.
About 75 percent of all factories have resumed business and Thailand’s economy posted double digits in the first quarter of 2012. According to the National Economic and Social Development Board, GDP grew 11% from forth quarter of 2011, when the economy had contracted 10.8%. The IMF forecasts growth of 5.5% for this year and 7.5% for 2013. But still, some are sceptical about a robust economic recovery in 2012.
Sethaput Suthiwart, managing partner of advisor company, said,"I think the numbers both in the 1st and 2nd quarter came out better than people have expected, but I think a lot has got to do with the very low base that we’re operating on. I think we should not get to a level of complacency that it’s going to look good throughout the rest of the year."
With more than two thirds of the GDP based on exports, it seems that no country in Asia is more vulnerable to slow down in global trade than Thailand. And that is starting to bite with the government trimming down its forecast for export growth to 7% from the prediction of 15% earlier this year.
Supong Limtanakul, vice president, external affairs of Bangkok University, said,"Thailand base a lot of our future on exports. Exports are an external factor that we have no control over. We don’t know how deep the Euro Crisis will go. A lot of variables need to be taken into consideration."
Dusita Chumsri, Bangkok, said,"Thailand’s economic activity in the second quarter shows an improvement as production and capacity utilization returned to normal pre-flood levels. As the threat of the Euro Crisis is far from over, Thailand’s economic growth in the coming quarters will hinge heavily on domestic demand, in particular, private investment and consumption."
The World Bank has warning the Thai government to slow down its populist policies due to the unstable world economy. A viewpoint that is shared by academics as the government’s minimum wage hike and pledge to spend more than $11 billion on infrastructure and water-management projects could have negative long-term economic effects.
Supong Limtanakul, vice president, external affairs of Bangkok University, said,"If we look at it in terms of macro theory, we are living beyond our means like Greece did and in the end, we will suffer. It is not sustainable."
The worst of the impact of the Euro crisis on Thailand has only just begun to surface through export figures. But if the situation prolongs, the fear is that it could pass through to production, income and expenditure and the domestic side. Which is disturbingly, where the real impact will be.