Briefing Notes for the Launch in Bangkok, March 2009
Growth performance and prospects
- The rate of growth dropped markedly in Thailand, from 4.9% in 2007 to 2.6% in 2008,
the lowest since 2002.
- Domestic demand was insufficient to support GDP growth in 2008.
- The rate of growth of gross fixed investment fell steadily during the year from
5.4% in the first quarter (year-on-year) to -3.3% in the fourth quarter, averaging
1.1% for 2008 the lowest level since 2002.
- Private consumption grew at an average of 2.5% in 2008, higher than in 2007
(1.6%) but still slightly below the 2008 rate of GDP growth.
- Government consumption increased at an average of 0.4% in 2008, significantly
lower than in 2007 (9.2%).
- Although exports grew at double digits (in nominal dollars) on average during 2008
(year-on-year), they drop fast towards the end of the year: -18.6% in November, -12.5%
in December, and -26.5% in January 2009.
- As of the end of February, GDP growth was forecast to drop to -0.5% in 2009, the first
negative growth rate since 1998 – when it reached -10.5%.
Inflation, monetary policy and exchange rate developments
- Reflecting dramatic volatility in international commodity markets, Thailand’s inflation rate
increased from 4.3% in January 2008 (year-on-year) to a peak of 9.2% in July, but then
it plunged to 0.4% in December.
- In the first two months of 2009, the inflation rate was negative (-0.4% in January and
-0.1% in February) and is forecast to be 0% in 2009.
- Tracking developments in inflation, the Bank of Thailand increased its policy rate
moderately, from 3.25% in July to 3.75% in August, before cutting it by 100 basis points
in December, 75 basis points in January 2009 and 50 basis points in February to 1.5%.
- The combination of drops in exports and cuts in interest rates contributed to a
depreciation of the exchange rate from an average of 32.3 baht / dollar in the first half of
the 2008 to 34.8 in the fourth quarter and 35.3 in February 2009.
- Thailand held $110 billion in foreign exchange reserves as of the end of February 2009,
up from $98 billion a year before.
Fiscal situation and perspectives
- The budget deficit decreased from 2.4% of the GDP in 2007 to 1.4% in 2008.
- On January 2009 Thailand’s Parliament passed a stimulus package of B115 billion ($3.3
billion, 1.2% of the GDP) which includes the following features:
- It extends a package of economic stimulus measures implemented by the
previous Government, including such measures as lower water and electricity
charges, free rides on some of Bangkok’s public buses and free third-class train
- One-time distribution of B2,000 in cash to people who currently earn monthly
salaries of less than B15,000.
- It includes other measures in the areas of water-supply management, utilities,
transport and logistics, energy, tourism, education and healthcare.