Thai economy unlikey to contract this year-c.bank

Thailand's economy is unlikely to shrink this year following interest rate cuts, the Bank of Thailand said on Wednesday.

Central bank Chief Economist Amara Sriphayak said recent interest rate cuts by the central bank and commercial banks should help reduce funding costs and boost spending.

"After the policy rate cuts, major commercial banks have also cut rates. That should help reduce costs and make consumers confident to spend. So the economy this year should not be negative," she said.

The central bank is due to releases new economic growth projections on Friday.

It cut its policy rate by a combined 175 basis points to 2.0 percent in December and January to ward off recession.

Last week Finance Minister Korn Chatikavanij said economic measures -- including tax breaks, especially in the property sector -- and cash handouts for poorer Thais, should ensure economic growth of 2 percent this year.

That would still be the lowest in a decade and down from an estimated 4 percent in 2008.
In comparison, the Thai economy shrank 10.5 percent in 1998 because of the Asian financial crisis. The weakest performance since then was 2.1 percent growth in 2001.

Amara has said previously that unemployment could rise to 1 million this year, or 2.8 percent of the workforce, if the economy did not grow at all.