Thu, May 23, 2013 16:44:35 PM
Bangkok Post
Thu, May 23, 2013 16:44:35 PM
Bangkok Post
In the worst case scenario, the impact of the eurozone debt crisis would trim Thailand's economic growth by between 0.5 and 1.0 per cent, Fiscal Policy Office director general Somchai Sujjapongse said on Tuesday.
Previously, the FPO projected the gross domestic product growth for the year at 5.7 per cent.
There was a strong likelihood it would take five to 10 years to settle the financial crisis in Europe. This is because it is an economic structural problem, involving financial institutions, public debt, labour markets and politics, which would take a long time to resolve, Mr Somchai said.
In the short-term, the eurozone crisis would hurt the export sector because exports to Europe accounted for 9.4 per cent of total Thai exports, he said.
Even with the problem, the FPO projects exports will expand by 12.8 per cent this year, he said.
The FPO chief said Thailand has strong enough economic fundamentals to withstand the negative consequences of the debt crisis in Greece. Thailand has a high level of foreign reserves, a low unemployment rate and strong financial status to use money for economic stimulation.
The inflation rate is being held at three per cent, which is a suitable level, he added.
The financial sector is also strong, as witnessed by its average funding to risk asset ratio, which is as high as 15 per cent, while the financial system's non-performing loans stood at no more than three per cent on average, he said.
Mr Somchai said one way to minimise the eurozone crisis's impact in the long-term is to reduce the country's dependence on exports and increase domestic consumption and investment.
The government has been trying to do so by restructuring the country's export structure, pushing ahead with its investment plan in infrastructure development megaprojects and implementing policies to raise the people's incomes, he said.
Atchaka Sribunruang, secretary general of the state Board of Investment, said foreign direct investment surged 66.5 per cent in the first half of this year.
Mrs Atchaka said a total of 692 investment applications with a combined worth of 278.47 billion baht were submitted to the board from January to June, 2012.
The number of applications increased over the same period last year by 32.6 per cent and the value by 66.5 per cent, she said.
Of the total applications, 409, or 59 per cent, worth 185.51 billion baht, were projects to expand existing businesses. The other 283 applications, or 41 per cent, worth 92.95 billion baht, were projects to start new businesses.
"The FDI expansion shows that Thailand is still an important place for investment in the region.
"I'm confident that the trend will continue till the end of the year and that the value of investment projects will surpass the target of 630 billion baht," the BoI secretary general said.
