Economists predict that the current economic expansion will continue, with Bangkok Bank the largest local bank releasing mid-year estimates placing total increase in the economy at 0%, with growth in the manufacturing sector of 14% and the agricultural sector of 4%. Inflation has not yet emerged as a significant concern, nor has pressure on wage rates, although and prices h
started to increase dramatically. The consumer price index is expected to increase by 6%
1990, up from a historical average of 2.2% for most of the previous decade.
The government has managed foreign debt well, and despite a historically low savings rate, t current account deficit is only 3.5% of GDP, the debt service ratio is 13.8%, and external d€ 39.6% of GDP. The government has run a balanced budget for the fiscal years 1987, 1988 a
1989, and is projected to run a small budget surplus in the fiscal year 199 I. There is therefore i external pressure for structural reform of the economy, or for a revaluation of the CUrreni Exchange rates are fixed to a basket of currencies, predominantly the dollar and the yen. 1] Bank of Thailand has been noted for maintaining a consistent policy, and exchange rates ha only moved within a marginal band around the dollar, mostly in response to changes betwei the dollar and the yen. Interest rates on deposits have been controlled, leading to an effecti cap on commercial lending rates of approximately 16 to l7%.
The most serious threat to the economy is the strain on the existing infrastructure, including r road and port facilities, industrial and municipal facilities, wastewater disposal ar telecommunications. Of equal concern, is the lack of skilled labour and educational facilities
However, foreign investment remains strong. Recent polls of japanese business indicate Thailar is the number one destination for foreign investment in southeast Asia. Over 1,000 forei investment projects in new industries were approved by the Board of Investment from 1988 1989, with only a few hundred having begun implementation. Total foreign investment in ne projects is expected to grow by 150%, with net direct investment in existing projects expandir by 45%.
THE THAI ECONOMIC OUTLOOK, 1990 : Thailand Investment article from Business Management Catagory THE THAI ECONOMIC OUTLOOK, 1990
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