The International Monetary Fund (IMF) said on Thursday that Thailand's economy is expected to post robust growth this year, while the country needs to continue with the economic reform agenda and guard against various domestic and international risks.
The Thai economy is expected to rebound sharply this year partly due to monetary easing and a large fiscal package, after going through a challenging 2011 marked by massive floods and disrupted supply chains in the wake of the Japanese earthquake, the IMF said in a statement after its executive board concluded the 2012 Article IV consultation report on Thailand.
The Southeast Asian nation's short-term economic outlook remains favorable, but there are also significant downside risks stemming from the "unsettled global scenario, internal political uncertainties, and capacity constraints in the execution of public works," said the 24-member IMF executive board.
The IMF executive directors supported the Thai authorities' ambitious reform agenda aimed at promoting more inclusive growth, noting that recent income redistribution policies, including the rice price support mechanism, need to be monitored and assessed with a view to containing fiscal costs and improving efficiency.
Meanwhile, minimum wage increases should be accompanied by measures boosting labor productivity to preserve competitiveness. Technology transfers and investment in human capital and infrastructure, particularly in less developed regions, are needed to boost long-term growth, according to the statement.
The executive directors agreed that the current expansionary fiscal and monetary stances are appropriate in the context of anemic global demand and muted inflationary pressures. Against this background, they supported the Thai government's fiscal package and welcomed the Bank of Thailand's recent decisions to lower interest rates.
"The authorities should unwind the supportive policy stance as the recovery takes hold and move to a medium-term consolidation path consistent with low inflation and fiscal sustainability," added the executive directors.
The Washington-based global lender predicted that the Thai economy would grow by 5.5 percent this year./.