Economic forecast update
Economic forecast for France, Thailand and Pakistan updated by EIU.
France Forecast
Mar 2nd 2006
From the Economist Intelligence Unit
Source: Country Forecast
France's right-of-centre government enjoys a sizeable majority in parliament and should remain in office until the next presidential and legislative elections in 2007. However, its authority was badly dented in 2005 by French voters' rejection of the proposed EU constitution and by the outbreak of rioting in run-down suburbs across the country. In addition, its sense of purpose is likely to be weakened during 2006 by the rivalry between the prime minister, Dominique de Villepin, and the minister of the interior, Nicolas Sarkozy, to succeed Jacques Chirac as president in 2007. The government has postponed its programme of income tax cuts for the second year running in 2006, but this will not prevent the general government budget deficit from exceeding 3% of GDP for the fifth consecutive year. Real GDP growth is forecast to pick up from 1.4% in 2005 to 1.9% in 2006 and 2.4% in 2007. Despite persistently high international oil prices, inflation will remain subdued in 2006-07 as a result of favourable base effects and continued slack in the labour market. Although the euro weakened in 2005, the Economist Intelligence Unit expects it to renew its appreciation against the US dollar in 2006. France will post large trade deficits in both 2006 and 2007, but these will be partly offset by large surpluses on the services and investment income accounts.
Key changes from last update
Political outlook
Opinion polls indicate that Mr de Villepin's labour-market reforms have taken a toll on his popularity with voters.
Economic policy outlook
Although recent social protests will not prevent the adoption of the government's modest reform of the labour market, they could deter further reforms in the run-up to the presidential election in 2007.
Economic forecast
A weaker than expected outturn for GDP growth in late 2005 means that the economy will enter 2006 with less momentum than we had expected. We have therefore revised our forecast for GDP growth in 2006 down from 2% to 1.9%.
Thailand Forecast
Feb 28th 2006
From the Economist Intelligence Unit
Source: Country Forecast
The popularity of Thailand's prime minister, Thaksin Shinawatra, is crumbling amid widespread public criticism of his family's decision to sell its stake in Shin, the telecommunications-based conglomerate, to a Singaporean investor. His popularity was already waning as a result of rising inflation and interest rates, and daily violence in southern Thailand. The Economist Intelligence Unit expects Thaksin to remain in power, but his authority will be compromised. The budget will record small deficits over the forecast period as the government raises expenditure to stimulate the economy. Monetary conditions will continue to tighten in 2006, and the inflation rate will start to fall in tandem with modestly lower global oil prices in 2007. Real GDP growth will average 5% in 2006-07, driven by higher investment demand as the government embarks on its infrastructure development programme and steps up the pace of privatisation. The current account will remain in deficit in 2006-07, owing to strong demand for imported capital and intermediate goods for investment purposes.
Key changes from last update
Political outlook
Mr Thaksin has dissolved parliament and called fresh elections, scheduled for April 2nd. The prime minister will wage an electoral campaign aimed at attracting the support of poorer, rurual thais, his main base of support. Opposition parties have threatened to boycott the election.
Economic policy outlook
In January the government launched the bidding process for its ambitious Bt1.8trn ($46 billion) infrastructure development programme. The bidding process is likely to be criticised, however, for its lack of transparency and potential investors could be deterred by the current political uncertainty.
Economic forecast
We have revised up our forecast for real wage growth in 2006-07, in line with tight labour market conditions—the rate of unemployment was 1.8% at end-2005.
Pakistan Forecast
Feb 24th 2006
From the Economist Intelligence Unit
Source: Country Forecast
The Economist Intelligence Unit expects the president, General Pervez Musharraf, to remain in power in 2006-07. He has the support of the army, a majority in parliament, as well as the power to dismiss the prime minister and the right to suspend parliament (in his capacity as Chairman of the National Security Council). His supporters are also likely to be re-elected in a parliamentary election in 2007. The biggest risk to political stability is the possibility that he may be assassinated. The economy is expected to perform strongly, despite the earthquake that hit northern Pakistan in October: real GDP growth is expected to reach 6.5% in fiscal year 2005/06 (July-June) and 6% in 2006/07, following the government’s provisional figure of 8.4% at factor cost (7.8% on an expenditure basis) for 2004/05. Inflation remains the biggest threat to the economy: annual inflation will average 8.8% in 2006 and 6.7% in 2007. The current-account deficit will widen to 3.8% of GDP in 2006 and 3.9% in 2007, in line with the rising merchandise trade deficit.
Key changes from last update
Political outlook
In late January, acting upon a fresh approach from a court in Pakistan, the international police organisation, Interpol, issued international notices for the arrest of the former prime minister and leader of the Pakistan People's Party, Benazir Bhutto, and her husband. Nevertheless, the decision to arrest them will depend upon whether the country in which they reside in (or visit) has an extradition treaty with Pakistan. The move will galvanise the opposition.
Economic policy outlook
On January 26th the central bank released is monetary policy statement for January-June 2006. Despite holding rates constant, it stated that it was concerned about the high level of inflation. It stated that it remained open to raising interest rates in the future.
Economic forecast
Owing to high oil prices and strong merchandise import growth, we have adjusted our forecast for Pakistan's current-account deficit. It is now expected to widen to 3.8% of GDP in 2006 and then rise to 4.1% of GDP in 2007.
France Forecast
Mar 2nd 2006
From the Economist Intelligence Unit
Source: Country Forecast
France's right-of-centre government enjoys a sizeable majority in parliament and should remain in office until the next presidential and legislative elections in 2007. However, its authority was badly dented in 2005 by French voters' rejection of the proposed EU constitution and by the outbreak of rioting in run-down suburbs across the country. In addition, its sense of purpose is likely to be weakened during 2006 by the rivalry between the prime minister, Dominique de Villepin, and the minister of the interior, Nicolas Sarkozy, to succeed Jacques Chirac as president in 2007. The government has postponed its programme of income tax cuts for the second year running in 2006, but this will not prevent the general government budget deficit from exceeding 3% of GDP for the fifth consecutive year. Real GDP growth is forecast to pick up from 1.4% in 2005 to 1.9% in 2006 and 2.4% in 2007. Despite persistently high international oil prices, inflation will remain subdued in 2006-07 as a result of favourable base effects and continued slack in the labour market. Although the euro weakened in 2005, the Economist Intelligence Unit expects it to renew its appreciation against the US dollar in 2006. France will post large trade deficits in both 2006 and 2007, but these will be partly offset by large surpluses on the services and investment income accounts.
Key changes from last update
Political outlook
Opinion polls indicate that Mr de Villepin's labour-market reforms have taken a toll on his popularity with voters.
Economic policy outlook
Although recent social protests will not prevent the adoption of the government's modest reform of the labour market, they could deter further reforms in the run-up to the presidential election in 2007.
Economic forecast
A weaker than expected outturn for GDP growth in late 2005 means that the economy will enter 2006 with less momentum than we had expected. We have therefore revised our forecast for GDP growth in 2006 down from 2% to 1.9%.
Thailand Forecast
Feb 28th 2006
From the Economist Intelligence Unit
Source: Country Forecast
The popularity of Thailand's prime minister, Thaksin Shinawatra, is crumbling amid widespread public criticism of his family's decision to sell its stake in Shin, the telecommunications-based conglomerate, to a Singaporean investor. His popularity was already waning as a result of rising inflation and interest rates, and daily violence in southern Thailand. The Economist Intelligence Unit expects Thaksin to remain in power, but his authority will be compromised. The budget will record small deficits over the forecast period as the government raises expenditure to stimulate the economy. Monetary conditions will continue to tighten in 2006, and the inflation rate will start to fall in tandem with modestly lower global oil prices in 2007. Real GDP growth will average 5% in 2006-07, driven by higher investment demand as the government embarks on its infrastructure development programme and steps up the pace of privatisation. The current account will remain in deficit in 2006-07, owing to strong demand for imported capital and intermediate goods for investment purposes.
Key changes from last update
Political outlook
Mr Thaksin has dissolved parliament and called fresh elections, scheduled for April 2nd. The prime minister will wage an electoral campaign aimed at attracting the support of poorer, rurual thais, his main base of support. Opposition parties have threatened to boycott the election.
Economic policy outlook
In January the government launched the bidding process for its ambitious Bt1.8trn ($46 billion) infrastructure development programme. The bidding process is likely to be criticised, however, for its lack of transparency and potential investors could be deterred by the current political uncertainty.
Economic forecast
We have revised up our forecast for real wage growth in 2006-07, in line with tight labour market conditions—the rate of unemployment was 1.8% at end-2005.
Pakistan Forecast
Feb 24th 2006
From the Economist Intelligence Unit
Source: Country Forecast
The Economist Intelligence Unit expects the president, General Pervez Musharraf, to remain in power in 2006-07. He has the support of the army, a majority in parliament, as well as the power to dismiss the prime minister and the right to suspend parliament (in his capacity as Chairman of the National Security Council). His supporters are also likely to be re-elected in a parliamentary election in 2007. The biggest risk to political stability is the possibility that he may be assassinated. The economy is expected to perform strongly, despite the earthquake that hit northern Pakistan in October: real GDP growth is expected to reach 6.5% in fiscal year 2005/06 (July-June) and 6% in 2006/07, following the government’s provisional figure of 8.4% at factor cost (7.8% on an expenditure basis) for 2004/05. Inflation remains the biggest threat to the economy: annual inflation will average 8.8% in 2006 and 6.7% in 2007. The current-account deficit will widen to 3.8% of GDP in 2006 and 3.9% in 2007, in line with the rising merchandise trade deficit.
Key changes from last update
Political outlook
In late January, acting upon a fresh approach from a court in Pakistan, the international police organisation, Interpol, issued international notices for the arrest of the former prime minister and leader of the Pakistan People's Party, Benazir Bhutto, and her husband. Nevertheless, the decision to arrest them will depend upon whether the country in which they reside in (or visit) has an extradition treaty with Pakistan. The move will galvanise the opposition.
Economic policy outlook
On January 26th the central bank released is monetary policy statement for January-June 2006. Despite holding rates constant, it stated that it was concerned about the high level of inflation. It stated that it remained open to raising interest rates in the future.
Economic forecast
Owing to high oil prices and strong merchandise import growth, we have adjusted our forecast for Pakistan's current-account deficit. It is now expected to widen to 3.8% of GDP in 2006 and then rise to 4.1% of GDP in 2007.
posted by Marko at 3/03/2006 12:41:00 AM
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