Thailand's economy can still grow 3 percent this year, though there were worries that economic problems in China could hurt exports, Finance Minister Sommai Phasee said on Thursday. China was the second biggest market for Thai exports during the first five months of this year. The United States was the biggest customer. The government will speed up spending to help boost the economy, so "growth of 3 percent should be attained this year," he told reporters at his ministry.
The ministry is expected to cut its 3.7 percent economic growth forecast for this year when it gives a new projection later this month. Southeast Asia's second-largest economy is trying to regain traction a year after the military seized power to end months of political turmoil. Growth last year just 0.9 percent. Although last year's coup restored some stability, the junta has yet to lift persistently weak exports and domestic demand.
Last month, the central bank cut its economic growth forecast for this year to 3.0 percent from 3.8 percent, with exports contracting for the third straight year. Exports are equal to more than 60 percent of the Thai economy. Low commodity prices have also hurt exports and cut farmers' income, and many parts of the country are suffering from a drought. Deputy Prime Minister Pridiyathorn Devakula told reporters at an investment event that "the drought impact on GDP is tiny", as a majority of farmers are waiting for the seasonal rains to arrive in August.
Thanavath Phonvichai, an economics professor at the University of the Thai Chamber of Commerce, told a separate briefing that the drought could reduce economic growth by 0.52 percentage point, bringing it down below 3 percent this year. He reckoned the government may need to inject as much as 100 billion baht ($2.95 billion) if it wants to lift growth to 3.5 percent this year.
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