Thai economy to grow 3.3% next year, FinMin says

By Kitiphong Thaichareon

BANGKOK, Nov 24 - Thailand's economy will likely grow 3.3 percent in 2010, the country's finance minister said on Tuesday, adding to signs the country may lag Southeast Asia's fast-rebounding emerging economies.

The forecast is in line with growth of 3-4 percent predicted by Thailand's state planning agency and at the bottom end of the central Bank of Thailand's projection for growth of between 3.3 precent and 5.3 percent next year.

Many private forecasters factor political instability into the outlook for Thailand, Southeast Asia's second-largest economy, with no end in sight to a seemingly intractable political crisis, underscored by plans for prolonged anti-government protests starting on Saturday. [ID:nBKK486658]

"Next year we still have a conservative forecast of 3.3 percent growth. The growth will be driven by government spending and a rebound in exports," Finance Minister Korn Chatikavanij told reporters.

Concerns about political instability pushed Thailand's benchmark stock price index <.SETI> down 2.1 percent on Tuesday to its lowest since Nov. 4.

Korn said he was concerned that the coming rally by red-shirted supporters of former premier Thaksin Shinawatra could affect the economy and tourism during a period when travelers usually begin to flock to Thailand.

Deputy Prime Minister Korbsak Sabhavasu told Reuters last week Thailand's $260 billion economy could grow 5 percent if political conditions remained stable.

Korn said he expected Thailand to return to positive annual growth of at least 3 percent in the final quarter of this year after the economy shrank 2.8 percent in the third quarter from a year earlier.

Other regional economies are recovering. Malaysia's contracted 1.2 percent in the third quarter from a year earlier, improving from a 3.9 percent decline in the second, and Indonesia's annual growth rate picked up in the third quarter.

Going into next year, most economists surveyed by Reuters expect Thailand to post among the slowest growth in Southeast Asia <MKTPOLL>. Indonesia, for example, is expected to grow 5.5 percent, Malaysia 3.8 percent and Singapore 5.7 percent.

CURRENCY STILL COMPETITIVE

On a quarter-on-quarter basis, Thailand's economy unexpectedly slowed to 1.3 percent in the third quarter from 2.2 percent growth in the previous three months, but a pick up is expected from the final quarter as government stimulus spending speeds up and exports rebound. [ID:nBKK201580].

Cabinet approved in September the first disbursement of a 1.43 trillion baht , three-year stimulus plan, a cornerstone of Thailand's economic recovery efforts.

Korn said the local baht <THB=>, which has risen about 4.7 percent against the dollar this year, was still competitive for the country's exporters.

The baht was at around 33.22 per dollar at 1002 GMT.

"Exports have improved, reflecting the central bank's role in ensuring the currency's stability and competitiveness," he said.

But he suggested intervention can't go on forever. "As central bank intervention is an expense, at one point, the central bank will have to consider whether this is worth continuing," he said.

The central bank has repeatedly said it will only intervene in the market to smooth out volatility in the currency.

Despite the baht's strength, customs-based trade data last week showed annual exports fell 3 percent in October, the smallest drop in a year.

The planning agency expected exports, which are equivalent to more than 60 percent of gross domestic product, to grow 10 percent in 2010 after falling 13.7 percent seen for this year. ((orathai.sriring@thomsonreuters.com; +66 2 648 9729; Reuters Messaging: orathai.sriring.reuters.com@reuters.net)) ((If you have a query or comment on this story, e-mail to news.feedback.asia@thomsonreuters.com))