Thailand warns of 6pc GDP decline
Thailand's economy is expected to contract by up to 6 per cent this year, but the country will still reward foreign investors over time, according to leading Thai government figures.
Prime Minister Chuan Leekpai and Deputy Finance Minister Pisit Leeahtam sought to convince investors that the country - the first to succumb to the region's currency crisis - was now on the road to recovery.
Speaking at an investors' forum in Hong Kong, Mr Pisit said the situation would remain difficult this year.
He said the estimate for the country's gross domestic product had been sharply cut, as the crisis was proving worse than first anticipated.
Mr Pisit said: 'Economic growth this year will be much lower in the negative by about 5 to 6 per cent.
'The immediate aim of the government is to minimise any further decline of the economy and to bring about a recovery.' The revised GDP estimate - made jointly by the finance ministry and the International Monetary Fund - compares with earlier predictions of a 3 to 3.5 per cent decline.
Mr Pisit said the government had formulated a comprehensive reform package, which it was putting in place.
The package included financial sector restructuring, addressing the effects of the liquidity crunch, and revitalising the real economy.
He said the closure of seven troubled Thai finance firms announced yesterday was evidence of the government's decisive action.
Mr Chuan said the government had decided early on strictly to follow the free market guidelines advocated by the IMF.
He said: 'We are committed to letting the 'penalties of capitalism' follow their course.
'The best way to accomplish this task is to maintain an open economy, subject to the full forces of competition,' he added.
Mr Chuan said, rather than bailouts, the government would concentrate on providing the right legal and regulatory framework to speed up restructuring.
The premier said the main focus was now on the re-orientation of the central bank, the Bank of Thailand, towards which the government had sought advice from the World Bank and the Asian Development Bank.