(1) The high case scenario of 5 percent economic growth
The economy in 2007 will achieve 5.0 percent growth under the following conditions:
(i) Exports sector is competitive under increasing constraints and tourism income increase by 8-10 percent
(ii) The disbursement of public budget will not be less than 90 percent of total government budget and
state enterprise capital budget. Budget allocation should be prioritized to projects which support low-
income people with career development purpose, infrastructure development and social program (iii) Business
confidence improves which will support investment. (iv) Agricultural products' prices have been maintained
at stabilized level in order to support farm income (v) Average Dubai oil price will not exceed 58 US
dollars per barrel.
(2) The low case scenario of 4 percent economic growth
The economy in 2007 will expand according to the low case scenario if: (i) Investment
recovers at a slower pace (ii) The disbursement rate of government and SOEs investment budget is lower than
80 percent of total budget (iii) The global economy expands by lower than 4.0 percent which will lead to
slower growth of the Thai's exports and tourism sector (iii) The average Dubai oil price is above 58 US
dollars per barrel as a result of more tension on the US-Iran conflicts and impact from unexpected natural
disaster.
2.5 Probability Distribution of GDP Growth Forecast
Domestic economic conditions suggest that opportunities for investment to recover rapidly are less
than a slow recovery. Government budget disbursements are also needed to be expedited. In addition, the
probability that the averaged Dubai oil price for the whole year of 2007 being lower than 58 dollars per
barrel is likely to be smaller than otherwise. This is due to the fact that the oil prices have already
curbed down during the end of 2006. The world oil demand is also expected to increase, although various
countries have placed serious efforts on the development of renewable energy. In addition, there are some
downside risks from the conflicts between US and Iran. On the world economic front, tightening monetary
policy implementation will also put constraints to Chinese and Japanese economies which could expand at
slower rate than expected, rather than on the upside. Following stronger-than-expected Baht currency, export
and tourism could also expand at slower pace than anticipated.
As a result, NESDB forecasts that the probability of the Thai economy expanding higher than the
midpoint of 4.5 percent in 2007 is less than the probability of achieving the lower side of the forecast
range or asymmetric probability distribution with positive skewness. The probability of achieving the
economic growth of 4.0-5.0 percent is approximately 85 percent of which the probability of growth forecast
of 4.0-4.5 percent is higher than the probability of the growth forecast of 4.5-5.0 percent. This shows an
adjustment of probability distribution more towards downside risks.
3. Economic Policy Management for 2007
The economic management in 2007 should give priorities to the maintenance of economic stability,
productivity improvement and the support for adjustment of people and business sector during a political
transition period and an economic slowdown.
Measures to be implemented in 2007 are recommended as follows:
3.1 Accelerating government and SOEs's budget of FY 2007 to achieve no less than 80 percent
disbursement rate. Emphases should be made in particular on the budget allocated for the well-being
strategies at provincial level (5,000 million baht) and the budget for project of community development
following the sufficiency economy approach (5,000 million baht). In addition, the investment budget
allocation to infrastructure projects, logistics development as well as a rail based mass transit system
should also be implemented and operated as scheduled.
3.2 Supporting community and local people, such as stabilizing prices of agricultural products
and preparing measures to protect and alleviate drought problems which could take place during the middle of
the year.
3.3 Promoting exports and tourism by exploring new markets for exports amid an overall global
slowdown as well as working on public relations to create better understanding and stepping up security
system for tourism.
3.4 Implementing energy saving measures and developing alternative energy sources, particularly
the expansion plan of service providers and usage of NGV and Gasohol.
3.5 Creating and restoring confidence of both domestic and foreign investors by increasing public
relations to make a better understanding based on precise facts as well as implementing supportive measures
to increase opportunities for trade and investment, for example Japan-Thailand Economic Partnership
Agreement (JTEPA), Mass transit and logistics system development, Integrated water resource management,
Energy and alternative energy investment, Petrochemical industry investment, Area/Spatial development for
expanding production and investment base.
(Continue to).../Economic Projection ..