Government urged to encourage baht’s weakening

BANGKOK, Aug 27 (TNA) – The Thai government should adopt a policy to encourage weakening of the baht as advised by Chatumongkol Sonakul, chairman of the Bank of Thailand (BoT) Board of Governors, to enhance revenues in the export, tourism and agricultural sectors, according to a leading economist.

Delivering a keynote speech on “Overall Picture of Macro-Economy of Thailand at Present,” former deputy prime minister Olarn Chaiprawat said the baht should weaken to stay at around 36 to the US dollar in the present economic circumstance.

In the first quarter, the BOT managed to make the baht depreciate at 35.50 to the dollar, but the currency turned to strengthen and stay at 34 to the dollar in the second quarter.

Additionally, he said, the government should accelerate lending to small- and medium-size enterprises (SMEs) in the tourism, real estate and consumer sectors to stimulate the economy.

In the first half of this year, loans extended by commercial banks contracted by up to Bt220 billion, he said, adding that the government should speed up the budget disbursement and spending. Taxes should be reduced to boost economic recovery.

These measures, if successfully implemented, would make the Thai economy recover in a “U shape” and grow close to that of the third quarter of 2008 at 3.9 per cent.

He predicted that the gross domestic product (GDP) in the fourth quarter of this year would enjoy positive growth after having contracted 4.3 per cent in the same quarter last year due to the economic crisis. (TNA)