Asian Development Bank (ADB) projected that Thai economy will grow 5.5% in 2012 compared to .1% in 2011 due to the reconstruction of flood affected area and considerable stimulus package from the government. Dr. Luxmon Attapich, The ADB’s senior economist pointed out that 2012 growth of 5.5% was re-adjusted from previous projection of 4.5%.
2012 growth projection is based upon reconstruction of infrastructure resulting from the flood in the second half of 2011. Many long-term projects dealing with flood prevention and water management will also help boost the economy tremendously for the coming years.
Economic figures have climbed up in the first two months especially confidence from business sector and consumers.
Salary increases of civil service in January and a 40% rise in minimum wage, beginning in April 1, 2012 have pushed private consumption growth. Several stimulus packages are initiated by the government such as tax breaks for first-time house buyers and cash rebates for car buyers.
Meanwhile, forecasted inflation will be at the average of 3.4% in 2012 and 3.3% in 2013.
On the contrary, the Thai economy still faces external threat from a deeper recession in the Eurozone which shares almost 10% of Thai exports and 27% of tourism market. Increase in global oil prices will slow down the growth as well as seasonal threats from flooding and drought.
Dr. Luxmon Attapich mentioned that in order to gain confidence among investors, Thailand has to improve infrastructure to manage floods and restore industrial plants as well as come up with comprehensive water management. These issues need to be addressed to help revive Thai economy in 2012-2013.