The risk of negative consequences from the eurozone debt crisis is still high even though leaders of the European Union had provided assistance to Greece. The situation has yet to improve, he said.
In addition, the United States Federal Reserve has not introduced a third round of quantitative easing (QE3) to stimulate the fragile economy in the US, as was expected, he said.
The impact of US economic slowdown and the financial problems in Europe had directly and indirectly affected key economies in Asia, particularly China, Japan, India, South Korea, Taiwan, Singapore and Hong Kong, Mr Phumin said.
Due to a sharp decline in exports, these countries had slashed their economic growth projections for this year and cut their key policy rates, he said.
Thailand was also hurt by the crisis. Its exports over the first seven months of the year contracted 0.4 per cent, while imports were up 10.5 per cent, he added.
The export value in July contracted 4.46 per cent to US$19.5 million, substantially lower than the previous expectation that exports for the second half of the year would be around US$20-22 billion per month, said the TCC vice president.
Mr Phumin suggested that if the government wants to boost economic growth to between five and six per cent this year and over five per cent next year, the following nine urgent measures should be implemented.
1) The government should speed up its spending in various infrastructure development projects to stimulate the economy, particularly the water resources management and flood control projects. It must also ensure transparency in its budget spending.2) It should promote border trade as neighbouring countries still want consumer and capital goods.3) It should ensure stability of the foreign exchange rate to ensure it stays at a suitable level for strengthening the country’s trade competitiveness.4) It should support the tourism sector to enhance its competitiveness in attracting more foreign tourists, particularly when the export sector was being affected by global financial crises.5) It should encourage state agencies to hold meetings in Thailand, instead of going overseas, to boost the tourism sector.6) It should give top priority to the water resources management and flood control projects and regularly publicise its progress to create confidence among Thai and foreign investors to further boost investment.7) It should bring about political stability to enhance the confidence of Thai and foreign investors and local consumers to spur investment and domestic consumption.8) It should prepare financial measures to ensure sufficiency in the liquidity of manufacturers affected by the eurozone debt crisis, and9) It should curb fuel prices at levels that cause no problems for the people’s cost of living and on the production costs of manufacturers.
Apart from that, said Mr Phumin, the government should join forces with the private sector in implementing the following four measures:
1) Find new export markets and in the meantime to maintain old markets that were not being much hurt by the global financial problems.2) Promote border trade to ensure further expansion of trade with neighbouring countries.3) Promote the tourism sector to encourage more foreign tourists and to promote domestic meeting events to be hold by state agencies, and4) Provide training courses to improve skills of labourers to ensure their efficiency in line with the policy to raise daily minimum wage to 300 baht nationwide early next year. This will help minimize impact on production cost of manufacturers.
The TCC also reported that the overall consumer confidence index (CCI) dropped in August to 77.9 points, from 78.1 points in July, amid consumer worries about the domestic and global economies as well as flood concerns. To come up with the CCI, the economic and business forecasting centre of the University of the Thai Chamber of Commerce considered three indices.
Thanavath Phonvichai, the centre's director, said confidence in the overall economy rose in the month to 68.4 points, from 68.2 and confidence in job opportunity rose to 69.6 points from 69.3, but confidence in future income dropped to 95.8 points from 96.8.
An index below 100 points indicates consumers are still worried.
Mr Thanavath attributed the increase in consumer confidence to the cabinet’s decision to maintain value added tax (VAT) at seven per cent for another two years, to extend the excise exemption on diesel for another month and the increase in government spending to stimulate the economy.
The negative factors were the National Economic and Social Development Board slashing the growth forecast for 2012 from 5.5-6.5 per cent to 5.5-6.0 per cent, the 4.5 per cent export contraction in July, the rise in domestic retail prices of fuel, the continuing global economic slowdown and the violence in the far South.