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Economic growth could slow down in 2H: Thai central bank BOT
Date: 2010/7/22 Click: 1930

As Thailand's economy in the second half of 2010 is forecast to continue growing, its growth rate would not be as high as the first six months of the year, Bank of Thailand (BOT) deputy governor Bandid Nijathaworn said on Wednesday, the Bangkok Post's website reported.

Thailand's government's economic stimulus measures and the recovering but highly unpredictable global economy will further boost the Thai economy, Bandid said.

It is essential to closely monitor three factors in the world economy, including the U.S's high employment, the commercial banks' refusal to grant loans to other banks, and the decreasing financial privileges due to concerns over the European public debt crisis. European countries have to reduce spending in a move to tackle their public debt burden.

China could also see a slowdown in its economic growth, which could hamper the global economy, he said.

"These problems will likely hold back economic growth and we'll have to see if the impact will be more serious than expected, but the overall economy will continue to improve," the deputy governor said.

Meanwhile, he has warned "though the Asian economy is the main force driving the world economy, there are challenges as the world economy is divided into two groups -- the Asian countries that see continuous growth and the industrialized countries that experience a slowdown."

Bandid explained that "this leads to more capital inflows to Thailand and other Asian countries, causing the stock market to expand. But, this could produce a bubble economy, making the recovery more fragile."

The BOT will closely monitor the capital inflows' situation to prevent them from destabilizing the Thai economy, the deputy governor said.

Bank of Thailand assistant governor Suchada Kirakul echoed Bandid's remark, according to a report by the Thai News Agency ( TNA).

It is essential for Thailand to be careful of speculative trading of international hedge funds, Suchada has warned.

Amid the economic recovery in Asia, capital inflows have returned to the Asian equity and debt markets on hopes of a high return, she explained.

During July 1-16, net foreign capital flows into Thailand were valued at 14 million U.S. dollars, Suchada said.

And, from the beginning of 2010, net foreign capital flows into Asia were valued at 14,000 million U.S. dollars, she said.

Domestically, it is not worrying as at least there are more foreign tourist arrivals following the end of the political unrest in May, Bandid cited. The tourism sector contributes some 8 to 9 percent to the country's gross domestic product (GDP), he said.

Meanwhile, Thailand's export sector -- another main driving force for the country's economic growth -- is also expected to support the 2010 growth.

The Commerce Ministry has revised up its export growth forecast for 2010 from 14 percent to 19 percent year on year, or totally valuing at about 183 billion U.S. dollars, Commerce Minister Porntiva Nakasai said Wednesday.

Thailand's exports in the first six months (January-June), 2010, totaled 93.1 billion U.S. dollars, or a year-on-year hike of 36.6 percent.

Imports were up 51.7 percent year on year with a total value of 86.7 billion U.S dollars, leaving the country's trade surplus at 6. 4 billion U.S. dollars, she said.

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