Internal factors seen as major risk

Internal factors seen as major risk to Thai economy this year
Erich Parpart

The Nation April 24, 2015 1:00 am
THE RISKS to the economy from now until the end of the year are mostly internal factors such as the slower than expected recovery of the grassroots section of society and the possibility of further delays to the government's investment plans, economists warned.
Other risk factors include the potential of rising political tension caused by the drafting of the new constitution and an increase of product prices.

Economists said the policy interest rate should be lowered to boost the economy and make the baht more effective while the latest inflow of foreign capital into Thailand's stock and bond markets had slightly strengthened the baht but this was only a temporary phenomenon.

The chief executive officer of Asia Plus Group Holdings Securities, Kongkiat Opaswongkarn, said at an investment seminar arranged by the Stock Exchange of Thailand (SET) yesterday that the greatest issue for the economy right now was the recovery of grassroots people and their drag on domestic consumption.

"The recovery of the grassroots is sluggish and that is something to be worried about," he said.

The chairman and chief executive officer of Asia Wealth Securities, Pichit Akrathit, said capital from government investment was still not there and investors were waiting to see clarity in the government's investment plans while household debt, lower crop prices and uncertainty over future income were hindering internal consumption.

Tim Leelahaphan, Maybank Kim Eng Securities (Thailand) economist and assistant vice president of its Research Department, said the worst-case scenario for the economy could happen if government investment does not occur, there is stronger than expected opposition to the new charter and inflation rises.

"There has been a minor reaction and only comments from the opposition so far [to the charter] and we will have to wait and see what will happen during the next three months before the drafting of the new charter is finalised," he said.

Kongkiat said the slowdown of the economy had contributed to the poor performance of listed companies last year but he expected their profits to increase from last year's contraction of 17 per cent to no less than 25 per cent growth this year due to the lower base, the accommodative monetary policy and an expected increase in government spending on investment.