Bank of Thailand sees gradual economic recovery in 2002-03

Bank of Thailand sees gradual economic recovery in 2002-03

Kitiphong Thaichareon, Reuters, Bangkok

The Bank of Thailand confirmed on Thursday that 2001 economic
growth was feeble, but predicted a gradual recovery this year and
next as global markets bounced back.

In its quarterly inflation report, the central bank said Thai
gross domestic product expanded only 1.5 percent in 2001, against
4.4 percent in 2000. The official 2001 GDP figure will not be
released until mid-March.

The central bank said growth would pick up this year to 2-3
percent -- compared to a previous projection of 1-3 percent made
three months ago -- following improvement in main export markets.

It said 2003 growth would be 2-3.5 percent.

Assistant central bank governor Bandid Nijathaworn told
reporters he expected exports to grow a modest 2-3 percent in
2002 after a dismal seven percent contraction in 2001. Exports,
which have been the main growth engine for the Thai economy in
recent years, soared nearly 20 percent in 2000.

"I am convinced that 2002 would be better than 2001, mainly
due to economic recoveries in our major trading partners and
complementary Thai fiscal and monetary policies," Bandid said.

The forecasts were in line with market expectations and had
little impact on stocks or the baht. The Thai currency weakened
slightly to around 44.0 to the dollar by 0910 GMT (4.10 p.m.
Jakarta time), while the stock market stayed in positive
territory after morning gains.

Central bank chief economist Atchana Waiquamdee told reporters
that December exports fell 13.7 percent year-on-year. Exports
have posted a double-digit percentage drop in five of the past
six months.

She said December imports plunged 18.1 percent year-on-year to
about $4.37 billion, their lowest level since January 2000.

Atchana said Thai factories operated at an average of just
54.1 percent of installed capacity last year.

The Bank of Thailand's closely watched manufacturing
production index (MPI) rose a higher-than-expected 1.3 percent
year-on-year in December, partly helped by robust domestic car
sales which rose 36.6 percent year-on-year last month.

"The economy showed no signs of weakening compared with the
previous month. Manufacturing production remained stable, as
improvement in private consumption offset the slight decline in
investment," the bank said.

Gene Frieda, Thailand economist for online research firm 4CAST
FCT service, said the December MPI figure was at the upper end of
his forecast.

"While capacity utilization eased, production was buoyed by
continued robust durables demand, particularly for autos, from
consumers... The ongoing weakness in exports underscores the
somewhat surprising resilience of consumer demand," he said.

Bandid said two central bank rate cuts in December and
January, would take time to produce results.

"We should see the results of the two rate cuts in the third
quarter of this year," he said.