Projected growth components in 2010
(1) Total consumption expenditure is projected to increase by 4.0 percent in contrast with the contraction of 0.1 percent in 2009. Private consumption is revised upward from 3.0 percent in previous projection to 4.1 percent, reflecting (i) the strong expansion in H1, and (ii) the favorable household income condition in the latter half that will be supported by the expansion of manufacturing production and the farm income expansion in agricultural sector. Meanwhile public consumption is revised upward from 1.6 percent in previous projection to 3.9 percent, in line with the strong increase in H1.
(2) Total investment is forecasted to expand by 9.2 percent, compared to a contraction of 9.0 percent in 2009 and the expansion of 4.6 percent in previous projection. The upward revision of total investment is attributable to the revision of private investment from 5.0 percent in the previous projection to 12.1 percent and the favorable investment conditions in H2 such as the rate of capacity utilization that are approaching 70 percent in various manufacturing sectors, low real interest rate and Thai baht appreciation that lowers cost of capital, and the recovery of business confidence. Nevertheless, the projection of public investment is revised downward from 3.5 percent expansion in previous projection to 1.7 percent, reflecting the reduction of public investment spending in Q2.
(3) Value of total export in US dollar terms is projected to expand by 25.7 percent, compared to a decrease of 13.9 percent in 2009 and the expansion of 15.5 percent in previous projection. This upward revision is mainly attributable to (i) the revision of export quantity from 9.0 percent in previous projection to 17.2 percent which is in line with the strongerthan- expected expansion in H1 and the revision of projection assumption of global economic and trade volume; and (ii) the upward revision of export price assumption.
(4) Value of total export in US dollar terms is forecasted to grow by 32.9 percent, compared to a contraction of 24.9 percent in 2009 and the expansion of 24.0 percent in previous forecast. Import quantity of goods is revised upward from 18.0 percent to 24.9 percent, in line with the upward revision of consumption, investment and export that require import to increase accordingly.
(5) Trade balance is forecasted to record a surplus of 14.9 billion US dollar, declines from a surplus of 19.4 billion US dollar in 2009 but increase from 11.3 billion US dollar in previous projection. This upward revision reflects a large surplus of 6.8 billion US dollar in H1 and the upward revision of export forecast. Meanwhile, surplus in service account is revised downward to reflect a deficit in Q2 and a downward revision of projection assumption of the number of foreign tourists. However, current account is forecasted to register a surplus of 4.9 percent of GDP compare to 7.8 percent of GDP in 2009 and 4.1 percent of GDP in previous projection.
(6) Average headline inflation is projected to be in the range of 3.0-3.5 percent, narrowed down from 3.0 — 4.0 percent in previous projection and downward revision of the midpoint projection. The downward revision of midpoint projection is in line with the revision of oil price assumption from 75 — 85 US dollars per barrel in previous projection assumption to 75 — 80 US dollars per barrel in current projection and the extension of the 3 measures to reduce living costs.
Projection Condition for High and Low cases
(1) The high case scenario: The Thai economy in 2010 is projected to grow more than 7.5 percent under the following conditions: (i) world economic and trade volume expand more than 3.9 and 7.5 percent respectively, without serious economic slowdown in the U.S. and China in the remaining of the year, and the financial condition in Europe improve continuously; (ii) the national reconciliation plan is effectively implemented and political condition improves continuously; (iii) the Thai Khem Khang budget is sufficiently disbursed to offset the reduction of government spending under regular budget of FY 2010 and clearly provide extra stimulation effects to economic expansion; (iv) the average price of Dubai crude oil is not higher than 80 US dollar per barrel; and (v) there is no severe impacts of drought situation on agricultural sector.
(2) The low case scenario: The Thai economy in 2010 is projected to grow by less than 7.0 percent under following conditions (i) world economic and trade volume grow by less than 3.9 and 7.5 percent respectively; (ii) serious economic slowdown in major economies; (iii) the reemergence of political unrest; (iv) the disbursement from the Thai Khem Khang budget is delayed and unable to prevent the contraction of government spending; (v) the average price of Dubai crude oil is higher than 80 US dollar per barrel; and (vi) severe drought situation results in the contraction of agricultural sector.
5. Economic Management for 2010
Thailand’s economic growth pace in 2010 is edging up to high territory, providing (i) a strong expansion in the first half of the year, (ii) the improvement of global economic and domestic political conditions, (iii) the economic momentum that has been accumulated from strong recovery, and (iv) supportive fundamental factors in the latter half. Nevertheless, taking into consideration the trend of global economic slowdown that will reduce the pace of Thailand’s economic recovery and the high base effect of domestic economy, the pace of economic expansion in the latter half is likely to decline gradually and these two conditions tends to limit economic growth in early 2011. In addition, there remain downside risks that could render economic growth to lower than in the baseline projection and cause difficulties to economic management, particularly risks from severe economic slowdown in major economies, the fluctuation of capital flow and exchange rate between major currencies, and drought condition. Meanwhile, the recovery of tourism sector and investment remains conditional upon the constant improvement of domestic political condition. In this respect, the guidelines for economic management in the latter half are as follows:
(1) Improve country image in order to restore confidence of foreign tourists and investors. At the same time, the government should expedite the implementation of national reconciliation plan to ensure the constant improvement of domestic political condition and general economic confidences.
(2) Resolve key limitations to economic expansion, especially the Map Ta Phut Industrial Estate environmental regulations problem and related issues under the Section 67 of the 2007 Constitution, as well as, labor shortage in key manufacturing sectors.
(3) Monitor and mitigate the impacts of drought on agricultural production as well as maintain the stability of agricultural prices in the presence of Thai baht appreciation against the constant devaluation of Vietnamese’s Dong.
(4) Speed up key investment projects under the Thai Khem Kaeng Stimulus Package (SP2) and prepare key projects under the budget of FY2011 to be ready for implementation in the last quarter of 2010 and the first quarter of 2011 when the world economy tends to slowdown.
(5) Implementation of well-balanced monetary and exchange rate policies to maintain economic stability and to facilitate economic expansion under the pressure from Thai baht appreciation as well as an increase in volatility of capital flow and exchange rate movement of major currencies . Restore Thailand’s image to foster the recovery of tourism sector in the latter half and expedite the implementation of national reconciliation plan to ensure the constant improvement of domestic political condition and economic confidences.
Economic Projection 2010
Actual Data Projection 2010
2007 2008 2009 24 May 10 23 August 101/
GDP (at current prices: Bil. Bht) 8,529.8 9,075.5 9,050.7 9,729.5 10,000.9
GDP per capita (Bht per year) 129,239.6 135,454.6 134,683 144,141 148,162
GDP (at current prices: Bil. USD) 246.8 272.0 263.6 299.4 307.7
GDP per capita (USD per year) 3,739.2 4,060.0 3,922.6 4,435.1 4,558.8
GDP Growth (at constant prices, %) 4.9 2.5 -2.2 3.5 - 4.5 7.0 - 7.5
Investment (at constant prices, %) 1.5 1.2 -9.0 4.6 9.2
Private (at constant prices, %) 0.6 3.2 -12.8 5.0 12.1
Public (at constant prices, %) 4.2 -4.6 2.7 3.5 1.7
Consumption (at constant prices, %) 2.8 3.0 -0.1 2.8 4.0
Private (at constant prices, %) 1.7 2.7 -1.1 3.0 4.1
Public (at constant prices, %) 9.7 4.6 5.8 1.6 3.9
Export volume of goods & services (%) 7.8 5.1 -12.7 8.8 15.1
Export value of goods (Bil. USD) 151.3 175.2 150.9 174.3 189.7
Growth rate (%) 18.2 15.9 -13.9 15.5 25.7
Growth rate (Volume, %) 11.9 6.0 -14.0 9.0 17.2
Import volume of goods & services (%) 4.4 8.5 -21.8 16.4 20.6
Import value of goods (Bil. USD) 138.5 175.1 131.5 163.0 174.8
Growth rate (%) 9.1 26.5 -24.9 24.0 32.9
Growth rate (Volume, %) 3.5 8.4 -22.7 18.0 24.9
Trade balance (Bil. USD) 12.8 0.1 19.4 11.3 14.9
Current account balance (Bil. USD) 2/ 15.7 1.6 20.3 12.2 15.1
Current account to GDP (%) 6.3 0.5 7.8 4.1 4.9
Inflation (%)
CPI 2.3 5.5 -0.8 3.0 - 4.0 3.0 - 3.5
GDP Deflator 3.2 3.8 2.0 3.0 - 4.0 3.0 - 3.5
Source: Office of National Economic and Social Development Board, 23 August 2010
Note1/ Reinvested earnings has been recorded as part of FDI in Financial account, and its contra entry recorded as income on equity in current account.
--National Economic and Social Development Board--