Prof.Kriengsak Chareonwongsak
Senior Fellow, Harvard Kennedy School , Harvard University
kriengsak@kriengsak.com, www.kriengsak.com
Senior Fellow, Harvard Kennedy School , Harvard University
kriengsak@kriengsak.com, www.kriengsak.com
2010 has begun, and after analysis by many, I will now express my opinion on Thailand’s economy outlook for 2010, as follows.
1. Factors affecting Thailand’s economy in 2010
Positive factors will clearly affect Thailand’s economy in 2010, which is now showing signs of recovery with export as its driving force. Trade partner economies of 2009 will recover continuously, as evidenced by 2009 economic growth comparisons between the US and other world economies.
Government policies will help to drive the economy further and other policies will facilitate living cost reductions for all citizens. Thus, private consumption and investment may increase next year.
Negative factors may affect Thailand’s economy in 2010:
The Map Ta Phut problem persists despite continual project authorization affecting present investment and the confidence level of future investors.
Political instability sees the government unwilling to dissolve parliament and organize a new election. Furthermore, as opponents struggle to divide government and people, government economic policies also lack implementation, affecting consumer, investor and tourist confidence in 2010.
Baht currency will appreciate due to an increase of exports over imports, along with continuous capital inflow into the region.
Oil price 2010 will rise due to worldwide economic recovery. Moreover, constant US dollar depreciation will lead to partial US dollar reduction in investment holdings as investors turn to other assets, such as gold and oil in order to speculate.
2. Economic Forecasts for 2010
Inflation will increase due to Thai and global economic recovery increasing the demand for goods and services. Therefore price level and production costs will also increase, increasing the price of raw materials and oil.
Private consumption will rise slightly as positive and negative factors offset each other. Positively, increased consumption will improve other factors, consumer confidence levels and value-added tax revenue. Moreover, decreased unemployment will increase private purchasing power. Negatively; increased inflation rates will decrease consumption.
Private investment will not greatly increase. Despite world economic progress and various government policies, important negative factors will pull private investment back, namely, political factors, oil price increase, and the Map Ta Phut problem.
Export growth will increase while worldwide economics gradually improve. Exchange rate appreciation relative to other regional countries will not greatly affect exports.
Thailand’s economy in 2010 will improve from 2009, with private consumption and export in recovery, though more inflation from oil price increase and baht appreciation will slightly halt consumption and import.
3. Policy Recommendations for 2010
Short-term, public sector support should be given to conscientious entrepreneurs by importing new technology to improve production efficiency, or develop necessary infrastructure for transportation, irrigation or logistics systems; therefore also stimulating consumption and employment.
Moreover, to protect exporters, the government should coordinate with the Bank of Thailand to manage Thailand’s Baht currency, by determining effective but harmless short-term capital control measures for investment.
Long-term government issues must deal with substitute energy development, labour skill development, the future of financial institutions and capital market development, to enhance Thailand’s competitiveness and enable Thai entrepreneurs to better adjust to world economic fluctuation.
good article
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