Business The economic conditions in September 2009 continued to improve from the previous month in tandem with increased private and public spending as well as the pickup in external demand and world economy. Exports though, still contracted, but at a continually decelerating rate. Correspondingly, manufacturing production increased, both for domestic and overseas markets. Meanwhile, private investment, though improving, remained low as producers’ excess production capacity could accommodate for the increase in demand. Overall stability was upheld by a current account surplus as well as a high level of international reserves. Inflation rates remained low, while employment conditions improved particularly in the manufacturing sector. tr height="14">     2005  2006  2007  2008  2009 (Jan-Sept.) 1 Exports (f.o.b.) 109,362.00 127,941.32 151,258.35 175,233.06 108,091.97 2    (% change) 15.18 16.98 18.22 15.85 -21.11 3 Imports (c.i.f.) 117,615.71 126,946.84 138,476.31 175,124.97 91,277.43 4    (% change) 25.81 7.93 9.08 26.46 -32.63 5 Trade balance -8,253.70 994.47 12,782.03 108.09 16,814 6 Current account balance -7,641.81 2,315.25 15,681.73 1,633.00 16,087 7 Balance of payments 5,422.29 12,741.60 17,102.19 24,693.30 14,975.55 Source: Bank of Thailand Go to TOP

Thailand’s Economic Projection for 2009 and 2010 (As of September 2009)

2009 Forecast

The Fiscal Policy Office (FPO), Ministry of Finance, announced that the Thai economy for 2009 is forecasted to contract at -3.0 percent per year. Despite the sharp contraction during the first half of the year, it is projected that the Thai economy would start to recover in the second half of the year, and eventually expand in the last quarter of the year. The major factor attributing to this improvement is the public expenditures, especially investment expenditures under the “Thai Khem Khaeng” plan, along with the revival of major trading partners’ economy, Asian nations in particular. Nonetheless, the Thai economy still faces the risk from the slow recuperation of private domestic spending, both consumption and investment.

On the other hand, internal economic stability is expected to improve, given that inflation is projected to decline to -0.8 percent per year, following oil price which decreases significantly compared to last year as well as the tendency of stronger Baht. The projection of unemployment rate has an improving trend of 1.8 percent of total labor force, as the re-employment rises following the better expansion of the Thai economy in the second half of the year. As for external stability, current account in 2009 is projected to record a large surplus of 8.0 percent of GDP, as import value shrinks more than export value.

2010 Forecast

The Thai economy for 2010 is forecasted to expand at 3.3 percent per year (or within the range of 2.5 - 4.1 percent per year), with the expansionary fiscal policy continuing from late 2009 from public expenditures under the “Thai Khem Khaeng” plan as the major drive, along with the revival of private expenditures that would exhibit an improving trend from the low base in 2009. Meanwhile, export of goods and services in 2010 is forecasted to grow as the economy of major trading partners recovers.

As for internal economic stability, inflation is projected to rise to 2.5 percent per year (or within the range of 2.0 - 3.0 percent per year), following increasing oil price compared to 2009. For external stability, current account in 2010 is projected to record a smaller surplus of 4.0 percent of GDP (or within the range of 3.7 - 4.6 percent of GDP), as the revival in domestic demand would cause faster expansion of import value than export value.