Thai economy remains pressured by political malaise

BANGKOK, Sept 2 (TNA) – The Thai economy is already improving, but its growth remains pressured by political uncertainties, according to a top banker.

Vichit Suraphongchai, Chairman of Executive Committee of Siam Commercial Bank (SCB), said the Thai economy remained fragile and would not grow considerably because the unfavourable political climate is still a pressing factor constricting economic recovery.

He said it remains difficult to project whether interest rates would increase since it must be monitored in relation to global economic expansion.

In his view, interest rates would remain unchanged for a time being.

Regarding non-performing loans in the banking system — which Fitch Ratings (Thailand) projected would stay at 10 per cent, Mr. Vichit said that the non-performing loans (NPLs) incurred by SCB remained not exceeding 5 per cent because the bank had supervised lending quite strictly.

The bank’s loans grew by around Bt300 billion or 5 per cent of the total, he added.

The SCB Economic Intelligence Center projected Thailand’s gross domestic product (GDP) would contract 4.1 per cent this year.

However, the economy would turn around and grow 3.5-4 per cent next year boosted by the export and production recovery and the implementation of the government’s economic stimulus measures.

It also forecast the policy interest rate would edge up by around 25-50 basis points in the second half of 2010.

The baht is expected to strengthen and stay at 33.50 to the US dollar by the end of this year and at 33 to the dollar next year. Inflation is likely to stay at 2.4 per cent next year, so the possibility of deflation could be ruled out. (TNA)