Countries and Regions

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p. 13 of 17 BACK | NEXT Executive Summary Map I. Recent Economic Developments II. Short and Medium-Term Economic Prospects and Policy Issues A. Government Strategies B. Growth, Investment, and Savings C. Revenue, Expenditure, and the Fiscal Outlook D. Inflation, Monetary Policy, and the Financial Sector E. The External Sector Outlook F. Medium-Term Risks and Uncertainties III. Selected Policy Issues

Country Economic Review: Thailand : II. Short and Medium-Term Economic Prospects and Policy Issues

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E. The External Sector Outlook

49. In 2001, Thai exports could shrink as a result of reduced external demand, and the downturn in the electronics business cycle. Exports are expected to contract by around 4.5 percent, a sharp decline compared with 19 percent growth in 2000. Imports are projected to grow by around 1 percent due to continued imports of capital goods, a significant reduction from the 31 percent growth recorded in 2000. Weaker tourist revenue is expected toward the end of 2001 as a result of fears of airline travel and terrorism after the terrorist attack on New York and Washington in September 2001. Nevertheless the current account surplus in 2001 is expected to shrink to around 4 percent of GDP.

50. The capital account is expected to remain in deficit as banks and nonbanks continue their scheduled debt servicing obligations. In turn, the level of international reserves could slide due to scheduled repayments to IMF and other multilateral and bilateral creditors. But a more flexible exchange rate lessens the need for protective reserves. FDI inflows are not expected to pick up significantly, especially as the restructuring of the financial sector is virtually complete for the time being, and since privatization plans involving possible foreign partners appear to be on hold. The external debt service ratio is expected to remain manageable at around 17 percent, while the external debt to GDP ratio should remain about 62 percent in 2001.

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