Prime Minister Abhisit Vejjajiva has stated that the Thai government is well placed to deal with uncertainties at the macro level, since it has flexibility.
The Prime Minister focused on economic certainties in his address at the 5th Annual Euromoney Thailand Investment Forum, held at the Centara Grand Hotel in Bangkok on March 21. The theme of the forum this year was “Continued Growth in Uncertain Times.”
In his address, the Prime Minister said that Thailand had come through the global financial crisis that hit the country in 2009, when the Thai economy contacted by 2.3 percent. Over the last couple of years, the Government also had to face a number of political challenges. Even so, it still emphasized the solving of economic problems first and foremost. He believed that the emphasis would be the top of the agenda and in the voters' mind as Thailand moves to a general election in next few months.
The Prime Minister told the investment community that the Thai economy in 2010 registered a growth rate of 7.8 percent and further growth has been seen from all the indicators of January and February this year.
He explained that Thailand had come through the crisis without unemployment going much above one percent. The debt-t-GDP ratio is now stabilizing, at around 41-42 percent. The situation suggests that, in case of further uncertainties down the line, Thailand is well placed in terms of flexibility to adapt its fiscal stance. At the same time, the Bank of Thailand is in the process of mobilizing the policy interest rate, and again, has flexibility to deal with uncertainties at the macro level.
The Prime Minister said that he and the Minister of Finance would attend a Senate meeting to try to pass the Government’s mid-year budget. The 100-billion-baht budget is not a further stimulus package. On the contrary, he said, more than 80 percent of the expenditures will go toward repaying the debts. This shows that the Government has consolidated its fiscal position as the country moves ahead.
However, he said, challenges remain, since Thailand faces rising inflationary pressure, even though inflation at the moment is within a manageable range, at 2.87 percent year-on-year in February. But the rising prices might be a threat to consumer confidence. What the Government is now trying to do is to ensure further flexibility in the movement of both wages and prices, so that it would not have to pursue policies that would put in place market controls. Subsidies remain in place for diesel and LPG, but the Government can manage this issue through the Oil Fund.
The Prime Minister said that Thailand continues to improve its competitiveness through investment in infrastructure. There are a number of infrastructure investment projects to be carried out. For instance, Thailand is negotiating with China to build a high-speed rail system. Other mass transit projects are also going ahead according to schedule.
The Prime Minister is confident that the Government has laid a strong foundation, since it has steered the economy through the financial crisis.