Thai economy to contract 2.7% this year: World Bank

expand 3.5 per cent in 2010, said the World Bank.

Frederico Gil Sander, an economist at the World Bank’s Thailand office, said that while the Thai economy is showing signs of recovery, in the mid-term it is subject to several risk factors which will have an impact on economic growth.

The recent economic crisis caused a reduction in manufacturing industries, accounting for 40 per cent of the Growth Domestic Product (GDP), he said.

The improving international economies are helping boost production in Thailand and East Asia in the second half of this year.

The Washington-based bank boosted its projection on Thailand’s exports in 2009 to 12.7 per cent contraction from 14.1 per cent in its previous forecast.

The bank advised Thailand to reduce its dependency on exports in the long term to dampen the impact the economic slowdown from its trade partner countries.

He said the Thai economy rebounded from the bottom but a chance to grow in the future was still unclear due to fluctuations in internal and external factors.

It forecast the Thai economy in 2010-2013 will expand at a slow pace of less than five per cent.

Thailand’s unsettled domestic politics will have a great influence on the overall Thai economy as political changes will have a direct impact on the government’s investment policies, which may distract investors to move their businesses to other countries.

World Bank’s senior economist for Thailand Kirida Bhaopichitr said the bank advised the Thai government to stimulate local consumption to make up for sluggish exports and to accelerate investment of the private sector.

The government should speed up investment in basic infrastructure to reduce the production cost of the private sector, to boost competitiveness and to create jobs.

The World Bank said the economies in the Asia Pacific region were vastly influenced by China. It projected that Chinese economy in 2009 will grow 8.4 per cent, benefiting the regional economies to expand 6.7 per cent this year and 7.8 per cent in 2010. (TNA)