Thailand sees negative economic growth in 1997

Thailand sees negative economic growth in 1997

BANGKOK (Reuters): Thailand's gross domestic product is
expected to shrink 1.0-1.5 percent in 1997, the head of the
finance ministry's fiscal policy office said on Thursday.

Sommai Phasee, director-general of the fiscal policy office,
told reporters the contraction forecast was caused by a slowdown
in the economy and massive cuts in spending in the 1997/98
(October-September) budget.

"After the government further cut the budget by another 18
billion (baht, this week), authorities are revising the economic
forecast," Sommai said.

"According to preliminary data, it seems like we are going to
have a negative growth of 1.0-1.5 percent this year," he told
reporters.

However, Sommai said he saw the contraction as normal during
an adjustment period which Thailand is going through.

"Even Japan faced negative growth before. I think this will be
acceptable to the IMF," he said.

Under a $17.2 billion economic rescue program sponsored by the
International Monetary Fund, Thailand was required to produce a
budget surplus equivalent to one percent of gross domestic
product for this fiscal year. The government had earlier slashed
100 billion baht from the current budget.

Thailand's central bank had predicted in mid-October that GDP
would grow at a rate higher than one percent in 1997 despite the
worst economic crisis in decades. But it added the figure would
be slightly lower than the 2.5 percent forecast earlier by
authorities.

Thailand's GDP rose 6.4 percent in 1996.

The IMF said in August, when it arranged the massive
multilateral bailout program, that it still expected the economy
to grow 2.5 percent this year and 3.5 percent in 1998. The IMF
assumed the baht value at 32 per dollar but it recently fell
below 40 to the dollar before staging a small recovery.