..Press Release................................ UNESCAP News Services

Date 29 September 2006
Press Release No: G/41/2006

UNESCAP FORECASTS THAI GDP AT 4.7% IF NEW INTERIM
GOVERNMENT MAINTAINS POLITICAL STABILITY

Next few months crucial to investor confidence

Bangkok (United Nations Information Services) – In a new economic analysis of the aftermath of the military coup in Thailand, UNESCAP predicts that GDP growth in Thailand could reach 4.7% in 2007 if the new interim government maintains political stability and reduces uncertainty in government spending, especially in infrastructure investment.

“In our ‘best-case scenario,’ notes UNESCAP Executive Secretary Kim Hak-Su, “we expect public spending to increase under the new interim government and play a key role in boosting GDP growth.”

“Thailand’s macroeconomic fundamentals remain strong,” he says. “We expect growth to be robust at 4.5% this year. Exports are strong and inflation is falling. The relatively flexible exchange rate regime and high foreign exchange reserves have contributed to these good outcomes.”

As of today UNESCAP economists see no significant impact on the Thai economy from the September 19th coup d’etat which toppled the Thaksin government. They note that the Thai stock market remains steady, the Thai Baht is stable, and contagion to other regional markets is limited.

Although UNESCAP’s macroeconomic forecast remains favourable, uncertainty remains for the Thai economy’s short-term outlook.

Under a ‘worse-case scenario’ of political instability, UNESCAP predicts that in 2007 economic growth could fall to 3.1%, with inflation increasing to almost 10%. The Baht would depreciate by more than 20%, reaching almost 46 Baht per United States Dollar.

“The next few months will be closely watched by investors,” says Executive Secretary Kim Hak-Su. “The interim government will have a heavy responsibility to maintain economic stability and investor confidence in the economy.”

“In the short-term the new administration will need to outline policies regarding the investment climate, especially macroeconomic policies and economic governance measures.”

“It will be very important for the new interim government to provide timely clarification on government spending, particularly on the infrastructure investment component of the fiscal budget,” he adds.

For further information please contact:
Ms. Margaret Hanley
UN Information Services Bangkok
Ofc: +(66-2) 288-1862; Fax: +(66-2) 288-1052
Mob: +(66-085) 921-5881

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