The Governor of the Bank of Thailand, Dr. Prasarn Trairatvorakul, said the Thai economy is currently well below its growth potential, and that cooperation of financial and business sectors is vital for lifting growth potential.
In his address at the “Thailand Focus 2014” forum recently, Dr. Prasarn said that Thailand’s actual growth averaged 2.5 percent between 2008 and 2013.
During the period, the global financial crisis and the Thai mega-flood occurred. The economy did not rebound enough to compensate for lost growth during these large shocks. Demand-management policies are needed to restore confidence and bring growth to full capacity.
Over the downturns during this period, he said, Thailand’s economy has maintained strong fundamentals and stability, and thus allows policy makers to accommodate and boost the recovery without much risk to future growth. The central bank actively takes part in building these strong fundamentals and stability.
Dr. Prasarn added that, over the past three quarters, average growth is close to zero due to political uncertainty and the payback period from previous government policies, most notably the first-car buyer tax rebate scheme, which has dragged down private spending. A prolonged period of diminished economic activity eventually hurts growth potential. When businesses lose confidence, they draw down production and investment, which blocks progress in know-how and technology. A steady growth path is desirable because growth stability helps the private sector make long-term decisions.
The most recent economic data shows that consumption and investment have started to pick up in line with progression of political clarity and accelerated government disbursement. At the same time, world economic growth continues to recover steadily. With all these positive developments, prospect of growth recovery is promising.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
