Bangkok - A senior Thai finance ministry official Wednesday predicted the economy will grow by only 1 per cent next year. Somchai Sajjapon, director-general of fiscal policy, said falling exports, declining service industries and weaker domestic spending will cause a sharp slowdown in business activity.
As recently as October the Bank of Thailand was still forecasting 2009 economic expansion of 3.8 per cent to 5 per cent. The global financial crunch has worsened and Thailand's political turmoil saw the capital's airports closed for a week at the beginning of December.
A new five-party coalition government sworn in Monday has said it will undertake significant extra spending in an attempt to revive the economy.
Somchai said his office has lowered its estimate of 2008 growth to just 3 per cent, down from the 4.9 per cent registered in 2007.
Inflation in 2009 is expected to fall to 1 per cent, thanks to a sharp decline in oil prices and generally weakening consumer demand.
The commerce minister said exports fell for the first time in six years in November by 8.6 percent. The fiscal policy office expects little to no growth in exports and services during 2009.
