Thai economy continues fragile: World Bank

BANGKOK (AFP): Thailand’s economic recovery is on track but remains fragile, volatile and uncertain, the World Bank said today. Thailand’s recovery will remain difficult as long as the ongoing process of financial and corporate reform lags behind most of Asia, the bank said in a report on East Asia. “The pace and quality of the financial and corporate reforms continues to be the major constraint to the full cementing of the recovery,” it said. Thailand’s financial sector is still mired in non-performing loans, with NPLs accounting for as much as thirty-two percent of total credit, according to some estimates. The high percentage of NPLs, due in part to the banks’ unwillingness to write off bad loans, discourages bank lending to new enterprises and prevents investment, the report said. High levels of public debt, incurred as the government has boosted deficit spending in an attempt to resuscitate the economy, also are proving a drag on the recovery, it said. And private consumption may be slowing down, a potentially dangerous trend. Triggered by fears that Thailand’s recovery from the Asian financial crisis has lagged behind most of the rest of Asia, the Stock Exchange of Thailand (SET) key index has fallen more than 35 percent since January 1, and the baht has fallen below 41 to the dollar. The World Bank report reinforces continuing assertions of Prime Minister Chuan Leekpai, noting that the plunges in the baht and share prices “do not point toward a new crisis, as the balance of payments situation remains comfortable.”