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Thai gov't urged to take action against euro crisis
Publication Date : 05-09-2012
The Thai Chamber of Commerce is pressing the government to take concrete action to strengthen the economy, as the euro crisis will likely whack the export sector hard this year and may stunt economic growth next year.
TCC vice chairman Bhumindr Harinsult said yesterday that the government should undertake nine urgent measures including accelerating investment in infrastructure projects, emphasising cross-border trading, stabilising the exchange rate and promoting tourism.
"The government must immediately expedite measures if it wants to achieve the 5-to-6-per-cent economic growth rate this year and at least 5 per cent in 2013," he said.
The government should also ensure political stability and prepare financial support measures to shore up liquidity for business that will be affected by the euro crisis.
The results released yesterday of a survey by the University of the Thai Chamber of Commerce indicate that the crisis will not only slam Thai exports this year but also stifle economic growth. Thai consumer confidence declined for the second straight month in August.
Thanavath Phonvichai, director of the university's Economic and Business Forecasting Centre, said 0.5-1 percentage point could be shaved off growth in gross domestic product this year if export growth brakes to only 5 per cent.
The loss of every 100 billion baht of exports would drag down GDP growth by 0.5-1 percentage point, he said. The centre expects exports in the remaining months of this year to range from US$19 billion to $20 billion (590 billion to 620 billion baht), down from between $21 billion and $22 billion predicted earlier.
"The euro crisis has created not only a direct effect on Thai exports, but also an indirect impact on the country's growth. Consumers' confidence will also be hit hard as they will be discouraged from spending amid the uncertain circumstances," Thanavath said.
The Bank of Thailand, the Fiscal Policy Office and the Thai National Shippers' Council are scheduled to reveal revised export targets this month.
Based on the university's survey of 2,239 respondents, the Consumer Confidence Index fell last month to 77.9 points from July's 78.1.
The index has continued to slump after the National Economic and Social Development Board lowered the 2012 GDP growth forecast from 5.5-6.5 per cent to 5.5-6 per cent. Concern over export growth possibly slipping below 5 per cent and the high trade deficit also caused consumers to lose confidence last month.
Thanavath said consumer confidence would gradually slip away in the remaining months of this year because of the dim prospects for exports, while fuel prices are on the rise. Lower confidence has caused spending on new cars and houses, travel and new investment to dry up so far in the second half of the year as consumers worry about their future earnings and employment.
The survey also found that confidence in future income fell from 96.8 in July to 95.8 last month, but the index for future employment opportunities rose slightly from 69.3 to 69.6.
US$1 = 31.2 baht