Economic and Social Survey of Asia and the Pacific 2008 – Thailand

Thailand's economy is forecast to remain steady in 2008 with a growth rate of 4.9 per cent, virtually unchanged from the previous year and below the average rate of 5.8 per cent for the South-East Asian region, according to the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).

In its Economic and Social Survey of Asia and the Pacific, ESCAP said that in contrast with most South-East Asian countries, both private consumption and investment grew more slowly in 2007 than in 2006. In 2007 investment fell back to a growth rate of 1.4 per cent from 3.8 per cent a year earlier, ESCAP added.

In contrast, government consumption expanded sharply – by 10.8 per cent – in 2007, compared to just 2.3 per cent in 2006. ESCAP said that political uncertainty marred investor confidence during 2007.

But Thailand's export sector remained firm, partly offsetting the impact of falling investment, with growth at 7.1 per cent in 2007, although this was down from 8.5 per cent a year earlier in terms of volume.

In its Survey, ESCAP said that it expects private investment and consumption to recover in 2008, cushioning the fall in exports in the coming months as the industrial countries slow down.

Like in the rest of Asia and the Pacific, inflation will be the biggest worry in 2008. Inflation started to pick up strongly towards the end of last year, on the back of high oil and food prices, as well as the relaxation of some price control measures. While the Survey expects inflation in Thailand to be around 3.3 per cent in 2008, higher than in 2007, it says "there are greater uncertainties surrounding food price inflation." Agriculture's role in reducing poverty, increasing opportunities.

ESCAP, in a wider view of the Asia-Pacific region, said efforts to reduce poverty in the region required the promotion of productivity in the agriculture sector.

"Agriculture appears to be neglected, even though it still provides jobs for 60 per cent of the working population and shelters the majority of the region's poor people," it said in its Survey, which goes on to note that growth and productivity in the sector have slowed and the green revolution appears to have by-passed millions.

ESCAP said that by raising average agricultural productivity across the region some 218 million, a third of the region's poor, could be taken out of poverty. India, China, Bangladesh and Indonesia would gain the most.

It also noted that "large gains in poverty are also possible through comprehensive liberalization of global agricultural trade, which could lift a further 48-51 million people out of poverty in the region."

The policy focus needs to be on revitalizing agriculture. This, ESCAP said, requires connecting the poor to markets through improvements to rural infrastructure, the availability and management of water, agricultural technology, increasing the capacity to adapt technologies, and speeding up diversification and commercialization.