FINANCE MINISTRY TO HIKE 2009 ECONOMIC FORECAST

       The Finance Ministry will revise upward its 2009 economic forecast after several better-than-expected indicators have suggested a gradual recovery.
       Ministry spokesman Ekniti Nitithanprapas yesterday said the Fiscal Policy Office would release its updated forecast next Monday.
       He said several key indicators had recently suggested an improvement in economic conditions, such as exports rising month on month and the economic expansion of major trade partners China and India.
       Consumption has also increased as a result of the government's stimulus package, he added.
       The ministry previously predicted that the economy this year would shrink by about 3-3.5 per cent. The new projection could put the figure at between minus 2.5 per cent and minus 3 per cent, said Ekniti.
       It is expected to expand by 4 per cent year on year in the fourth quarter, following a series of falls in the preceding quarters. The economy is expected to contract by about 3-4 per cent year on year in the current quarter.
       The Asian Development Bank on Tuesday released its updated economic forecasts, which projected that China would grow by 8.2 per cent - up from the 7 per cent predicted in March.
       The ADB now projects that the Thai economy will contract by 3.2 per cent, against its previous estimate of a 2-per-cent contraction.
       The bank said that as Thai exports accounted for about 70 per cent of gross domestic product, a sharp fall in sales abroad had hit the economy particularly hard.
       Indonesia, whose exports account for only 20-25 per cent of GDP, has been less impacted by the global downturn, resulting in the bank lifting its forecast for 2009 economic growth to 4.3 per cent, from the previous estimate of 3.6 per cent.
       The ADB predicts the Thai economy will expand by 3 per cent next year.
       Ekniti said the Thai economy would expand by an average of about 4 per cent each year from 2009-11, driven by public investment worth Bt1.43 trillion. The inflation rate is predicted to be 2 per cent.
       Risks to growth, he added, were delays in the implementation of public projects and high oil prices.
       Critics have said achieving growth next year would be no surprise, given the very low base this year.
       Teerana Bhongmakapat, dean of Chulalongkorn University's Faculty of Economics, said the world economy would experience low growth in 2011 after expansion resumed next year. The recovery will, therefore, be W-shaped.
       He said there was also a probability of further shocks in the next few years in some countries. If such shocks occurred in large economies such as China, then the global economy would experience another round of turbulence.
       The risk of high inflation will also be a cause for concern after 2011 if the global economy recovers strongly.
       However, for the time being, economic recession remains a threat. The Thai economy will likely move in line with the global economy, said Teerana.