Thailand's GDP forecast downgraded to 7% on oil prices

Thailand's GDP forecast downgraded to 7% on oil prices

Bangkok, Thailand, Associated Press

Thailand's gross domestic product growth will likely reach 7 percent this year - falling short of an ambitious 8 percent target - because of rising world oil prices, Prime Minister Thaksin Shinawatra said on Friday.

"I don't think the GDP growth this year will be as low as 6.5 percent like some people expect. Seven percent will be most likely," Thaksin told reporters. "The oil prices will have some impact on our economy, but we will try our best to minimize the impact."

The prime minister also predicted global oil prices will continue to dog Thailand's economy for the next decade.

"Higher oil prices will remain our big problem in the next 10 years, but we will try to find the way out," Thaksin said.

Thailand's GDP - the value of all goods and services produced - grew 6.7 percent in 2003.

Thaksin said inflation won't rise significantly despite higher oil prices. "Inflation won't be that high. I can ensure it won't exceed 3 percent this year," he said.

The government started subsidizing fuel prices on Jan. 10 to minimize the impact of global oil price volatility on the domestic economy. It has since raised the price of gasoline following the recent surge in oil prices, and has indicated it may be boosted again.

Thaksin earlier said the government plans to launch energy- saving campaigns to reduce oil consumption. Government agencies may be required to use alternative fuels such as natural gas and "gasohol," a blend of ethanol and gasoline.

Deputy Prime Minister Suchart Jaovisidha said on Friday a plan to cut broadcasting time for state-run television in order to save energy may be implemented. Thailand imposed such a restriction 10-years ago.