IMF Advisor says Thailand on the right track

Based on an assumption that political stability is maintained and there are no major shortcomings in implementing stimulus measures.

For 2010, GDP is forecast to return to positive territory, growing 1 per cent, but this will depend a lot on recovery in the US, the European Union and Japan.

The IMF official, who headed a consultative mission to Thailand, said US economic recovery was expected in the middle of 2010, and the signs of recovery could be seen during the fourth quarter of 2009.

Mr. Weerasinghe said Thailand was far from the hardest hit economy in the region, with more export reliant countries such as Singapore, Taiwan, Hong Kong and Japan all expected to fare worse this year.

Thailand has an appropriate stance in fiscal and monetary policies, Mr. Weerasinghe said, with short-term stimulus spending, including this year’s projected budget deficit, equal to 4.5% of GDP. “It’s about the right size. The challenge will be to ensure speedy and complete implementation,” he said.

The official also welcomes the Thai government’s bid to push for more credit guarantees to encourage banks and other financial institutions to lend more money to businesses and industries. An extended recovery in industrialized economies would affect Thailand and other countries.

Nevertheless, Thailand had fared relatively well in the current crisis, with the performance and financial position of the private sector relatively robust and companies able to access credit and funding through the bond market.

Fiscal stimulus programmers had sought a balance between the need to boost consumption and investment, but for the medium to long term, there will be a need to shift more toward in-vestment. According to Mr. Weerasinghe, the main hope for a global recovery rests with governments increasing their spending programmed.