Thailand's economy is expected to grow 3-4 percent in the fourth quarter of this year from a year earlier after a likely contraction of 3.5-4.0 percent in the third, a senior Finance Ministry official said on Tuesday. Gross domestic product is expected to have grown 2.0 percent in the third quarter from the second, helped by improved consumption, investment and exports, after 2.3 percent growth in the second quarter, ministry spokesman Ekniti Nitithanprapas said.
"Economic indicators have clearly improved, reflecting economic stability. The key factor for the recovery is fiscal spending at a time of weak investment and consumption," he told a news conference. Unemployment returned to a normal level of 1.2 percent in the third quarter after a worrying level of 2.1 percent in the first quarter, Ekniti said.
Thailand's state planning agency is due to release official third quarter GDP on November 23. For 2009, the ministry predicted the economy would contract 3 percent, which would be the weakest performance since the 1998 Asian economic crisis, he said. The Thai authorities have adopted a deficit budget and fiscal measures together with aggressive rate cuts to revive Southeast Asia's second-largest economy, which emerged from its first recession in 11 years in the second quarter.
The Bank of Thailand (BOT) cut its policy rate by 2.5 percentage points between December and April, keeping it unchanged at a record low of 1.25 percent since then. Despite a strong baht currency, exports, equivalent to more than 60 percent of GDP, have shown some improvement, Ekniti said. Annual exports fell 17.7 percent in the third quarter after a 26.2 percent drop in the second quarter.
The baht traded at 33.40 per dollar on Tuesday and has risen about 4.2 percent so far this year, the fourth-best performer in Asia, despite central bank intervention. BOT Deputy Governor Bandid Nijathaworn reiterated that the baht was still competitive for trade and that the central bank would only intervene to curb excessive moves. "The central bank will act if it's volatile. The baht is not a problem for exports at the moment," he told reporters.