Director of the BoT’s Office of Macroeconomics Songtham Pinto said the 4.8% growth forecast this year would be driven largely by domestic spending. The central bank believes the recent flooding situation will not affect the country’s long-term production capacity since the production sector will soon resume normal operation in these 1-6 months.

Service in the private sector and tourism, which are expected to receive a short-term blow from the flooding, will rebound in 1-2 months due to the government’s stimulus packages. Private investment is expected to rise following long repairs of buildings and machineries damaged by the floods.

Government spending on many projects, such as the rice mortgage scheme and the minimum wage hike, will continue to be the main growth stimulus this year, according to the BoT.

In 2011, Thailand saw a mere 1.8% economic expansion after the twin disasters in Japan and severe flooding in many provinces across the Kingdom. The inundation also caused shrinkage of 48% in the production sector, especially in electronics, automobiles and electrical appliances, while exports dropped for the first time since the global credit crunch.

Despite this year’s positive outlook, the central bank has suggested a close monitoring of the situations in major economies, especially the U.S. and the Eurozone, as well as the Thai government’s clarity on future flood prevention.

NNT

Mr. Prasarn Trairatvorakul, Governor of the Bank of Thailand (BOT) said the flooding that expanded into Rojana Industrial Park Phase 2 and 3, the total damage from the agricultural sector. And Rojana Industrial Estate Phase 1. United Rattana Nakorn Industrial Estate and then. The value of lost economic activity up to 1 billion baht.

Mr. Prasarn said that damage from the flood was higher than the Bank had expected the damage, especially in the industrial sector. Compared with a year ago that the damage only to the agricultural sector. The overall economic impact. In late October the bank forecast the economy would be down. And it is possible to cut up to 1% of the estimates. But because the bank has still not finalized the numbers again. And must include the restoration of government measures that will be much. It is an extension of economic growth in the year.

For the preparation of financial institutions are meeting the Bank to monitor the situation closely with commercial banks. The Bank of Thailand, the every other day. The branches of foreign banks are meeting every evening on Friday.

The issues that the Bank is preparing to prevent congestion of cash, checks, payment systems, as well as the preparation of the financial markets. Coordination with financial institutions and foreign currency swap transactions in advance. For trade transactions. Investment has continued to operate.

The BoT has enforced a new rule preventing investors from resorting to this approach, although the BoT still allows these banks to provide loans with inflation derivatives as long as their services are in accordance with the old principle.

BoT Governor Dr Prasarn Trairatvorakul admitted that the BoT has added about 10 tons of gold to the national reserves, raising the amount of gold in the form of foreign exchange reserves from 100 tons to 110 tons.

The governor explained that the move is to maintain the ratio of gold in the foreign exchange reserves at 3% of the total amount. Thailand’s foreign exchange reserves have been increasing lately and now totaled no less than 200 billion US dollars.

Dr Prasan further explained that the BoT is reducing the amount of the US dollar in hand since the asset is falling in value while the US economy remains fragile; therefore, the BoT is investing in other types of assets. He said investing in gold helps diversify the risk, and many countries are doing the same thing.

As of 8 April 2011, the BoT was holding gold worth 5.313 billion US dollars in foreign reserves, up by 15.54% or 714.76 million US dollars from 4.598 billion US dollars at the end of 2010.

Speaking in a seminar on Thursday, BoT Deputy Governor for Financial Institutions Stability Krirk Vanikkul stated that the global economic direction this year is better than last year. According to him, the US and Japanese economies are recovering well although the Euro zone debt crisis remains a risk factor.

Mr Krirk noted that the overall economic situations of G3 countries, including the US, the EU and Japan have improved. He believed that the Chinese economy would continue to grow, and this would also be beneficial to the Thai economic expansion this year.

The deputy governor projected that the Thai economy this year would grow in the upper range of 5%, rather than 3%, if no negative internal factors such as political disturbance happened.

Mr Krirk also indicated that the rising oil price would be another risk factor if the situation in Libya continued to spread to other countries in the Middle East. And if the oil price kept soaring up, the Thai economic growth this year would be unavoidably affected.

BoT Assistant Governor for Financial Institution Supervision Sorasit Soontornkes explained that the seven South Korean banks forced to suspend operations from the beginning of this year are only small banks and barely have business dealings with Thai financial institutions. Therefore, he was confident that there would be no impacts on the Thai side.

According to Mr Sorasit, the financial status of Thai banks remain strong with a Bank for International Settlements (BIS) ratio of 16% on average while their liquidity is over 30%, which is 6% higher than the minimum requirement.

The assistant governor added that the recent closure of many banks in South Korea mainly resulted from lack of liquidity as a result of the economic recession.

Lately, the South Korean authorities has suspended operations of four more savings banks for six months. Two of them are Busan and Daejoen Banks.

He said the committee submitted its report regarding initial data on the selection last Friday.

In the next step, each candidate would be asked to express his/her vision on the current economic situation and opinions about the master financial-sector development plan.

“The committee members concede it is very hard for them to select the most suitable person because each candidate is a senior person with much experience in the money and capital markets.

“It is expected the selection result will be released next month,” the finance minister said.

“Now, I don’t want to talk much about the selection. Let’s wait and see the result when the Cabinet meets and considers it,” he said.

A source said there are four strong candidates competing for the central bank governorship: Kasikornbank president Prasarn Trairattanaworakul, former deputy finance minister Pisit Lee-artham, Securities and Exchange Commission secretary-general Theerachai Puvanartnaranubal, and Mr Bandid, who is the deputy BoT governor overseeing financial stability. (TNA)

The BoT Deputy Governor Bandit Nijthaworn anticipated Thai economic situation for the remaining months of the year with various supporting factors such as the government’s expenditure and the low interest rate would result in the rise of economic trend.

He said however some risks needed to monitor closely particularly unclear global economic recovery, drought crisis, tourism deadlock, and private sector’s confidence. Meanwhile, on 14 July the Board of Monetary Policy will have a meeting to consider the economic trend and inflation so that the interest rate will be designed whether the adjustment is required for maintaining sustainable economy.

After meeting with delegates from the private sector, BoT governor Tarisa Wattanagase and other senior executives are to discuss the direction of the interest rates. Vice Chairman of the Thai Chamber of Commerce, Pongsak Assakul said that the interest rate hike is gradual, due to concerns of inflation. Even though the inflation rate in Thailand is lower than other countries, the BoT needs to make a pre-emptive move beforehand to prepare, said Mr Pongsak.

Meanwhile BoT assures that the Thai economy will expand and this will lessen the need to suppress the interest rates. According to the BoT, this is following the improvements of the world economy. However the BoT has affirmed that they will closely stabilize the currency value and the interest rates to prevent any interferences to the business sector.

Chairman of the Federation of Thai Industries (FTI) Santi Vilassakdanon said that investments are expected to be stimulated after improvements from the economic recovery, even though it will take awhile. The basic foundation of the Thai economy is strong due to exports, Mr Santi said. He added that this will help expand the economy, stimulating jobs and exports in agriculture. The above factors will help boost foreign confidence and help stabilize foreign investments in Thailand, Mr Santi said.

After adopting a low-interest rate policy for quite some time, the BoT has alerted the private sector to be ready to deal with an adjustment in the policy. The central bank also noted that the inflation rate, although considered low at present, has also started rising.

Meanwhile, Vice-President of the Thai Chamber of Commerce Pongsak Assakul revealed that the Thai economy had already begun to recover after the recent turmoil in Bangkok had put it on the brink of disaster. Although the political problem has only a small impact on the economic situation, the BoT is still concerned about the effect on the tourism sector.

As for the currency situation, the Thai baht is slightly stronger than that of trade partners and competitors. The private sector wishes the baht to remain as close to the competitors’ as possible.