RECOVERY WILL TAKE LONGER, ADB WARNS

       Though Thailand's economic recovery is expected to be V-shaped, the upward side will be shorter and take longer to reach its peak than in the past owing to economic concerns, the Asian Development Bank said.
       ADB country manager Jean-Pierre Verbiest said at a press conference yesterday that the slow recovery could be attributed to lingering concerns among Thai consumers, which have resulted in no immediate rise in spending, and the slow pace of global recovery.
       He also remarked that nothing should stop the government from carrying out its Bt1.4-trillion stimulus package.
       "The budget accounts for 5 per cent of GDP [gross domestic product]. If the project is interrupted, the country's economy will recover much more slowly than estimated," he warned.
       Public debt is expected to rise to 58 per cent of GDP by 2012, which should be manageable if economic growth is on track, he added.
       According to the Asian Development Outlook 2009 Update, Thailand has been recommended to avoid asset bubbles caused by rate cuts, while fiscal spending should be kept prudent to avert a rapid rise in debt and ensure efficient resource allocation.
       Finance Minister Korn Chatikavanij, however, rebutted yesterday by saying that an asset bubble was out of the question because land-price movement is under control while bank lending is lower than last year's level. A bubble could only burst when bank lending is extraordinarily high, he said.
       The ADB, while revising downward the Kingdom's economic growth estimate from minus 2 per cent to minus 3.2 per cent this year, expects the economy to resume expansion in 2010 with 3-per-cent growth, the lowest among Asean countries. Vietnam's growth rate is expected to be the highest at 6.5 per cent.
       To the bank, Asia is leading the world's emergence from its deepest recession thanks to government spending, tax cuts and rate reduction.
       The Thai government injected a total of Bt251.4 billion into the economy between last October and this June, or 2.8 per cent of GDP, according to the Finance Ministry. Meanwhile, it is set to spend another Bt1.4 trillion under the Thai Khemkhaeng (TKK) scheme from 2010 to 2012.
       "It's not a common thing. Thailand's growth rate should be higher than this, but the lack of confidence in the country before the global economic crisis partly caused such small growth," Verbiest said.
       At the NIDA Business School seminar yesterday, lecturer Ekkachai Nittayasetrawat said that a year after the 'Hamburger' crisis started, Thailand had shown the slowest rate of recovery, mainly in terms of domestic consumption.
       Though he commended the TKK scheme, he suggested the budget be earmarked for revenue-creating projects such as transportation, irrigation systems and alternative energy.
       Sukit Udomsirikul of the SCIB Research Institute said the pace of recovery remained uncertain because it was unclear as to how long orders would keep returning.
       The ADB report predicted that Singapore and Malaysia would grow by 3.5 per cent and 4.2 per cent respectively next year, thanks mainly to their effective stimulus packages and higher capital income.
       Since 70 per cent of the Thai economy relies on exports, it has been hit harder than countries that depend on the domestic market.
       "Fortunately, Thailand has diversified its export structure by expanding into new markets such as the Middle East, Russia and Africa. Also, Thailand's geography provides a lot of opportunities because it is located between two emerging countries - China and India - where the markets have been growing rapidly," Verbiest said.