Growth for 2017 re­vised up­wards to 3.9 per cent

SURGE IN EXPORTS AND TOURISM, AND IN­CREASED GOVT SPEND­ING TO BOOST ECON­OMY, SAYS UTCC

The Nation - - BUSINESS -

THAI­LAND’S 2017 eco­nomic growth fore­cast has been re­vised up to 3.9 per cent from the ear­lier es­ti­mate of 3.6 per cent on the back of higher-thanex­pected re­cov­er­ies in exports and tourism and ac­cel­er­a­tion in public spend­ing, ac­cord­ing to the Univer­sity of the Thai Cham­ber of Com­merce (UTCC)’s Cen­tre for Eco­nomic and Busi­ness Fore­cast­ing.

Thanawat Polvichai, the cen­tre’s di­rec­tor, said the lo­cal econ­omy would likely make a con­tin­ued re­cov­ery this year, with exports fore­cast to rise 7.5 per cent and in­fla­tion at 0.6 per cent, he said.

Eco­nomic growth is pro­jected at 4.2 per cent next year on the back of con­tin­ued ex­port ex­pan­sion, mas­sive in­fra­struc­ture in­vest­ments and up to Bt40 bil­lion to Bt50 bil­lion ex­pected to be spent for the 2018 elec­tion, he said.

The econ­omy is es­ti­mated to grow at an av­er­age of 4-5 per cent per an­num there­after to 2021. In­fla­tion is ex­pected at 1.5 per cent next year and 2 per cent and more dur­ing 2020-2021.

Saowa­nee Thairun­groj, UTCC rec­tor, said based on a re­cent sur­vey in 2017, about 91 per cent of Thai house­holds were in­debted, while only 8.9 per cent were debt-free. Most of the house­hold debts were in­curred in gen­eral spend­ing, fol­lowed by as­set pur­chases and debt re­pay­ments.

This year, debts av­er­aged at Bt299,266 per house­hold, up 0.4 per cent from the pre­vi­ous year , mark­ing the low­est rise in 10 years, she said. Of the to­tal house­hold debts, 74.6 per cent were in­curred through the for­mal sys­tem with the un­reg­u­lated sys­tem ac­count­ing for the re­main­ing 26.4 per cent.

The pro­por­tion of debtors in the for­mal sys­tem rose, while those in the in­for­mal sys­tem rep­re­sented the big­gest drop in 10 years, partly a re­sult of the gov­ern­ment’s su­per­vi­sion of the in­for­mal sec­tor.

Ac­cord­ing to the sur­vey, the in­debted house­holds have to shoul­der an av­er­age re­pay­ment amount of Bt15,438.92 per month.

A sur­vey found most house­holds spend­ing less in both value and vol­ume this year due to the higher cost of liv­ing. It also found that some house­holds were fol­low­ing the suf­fi­ciency econ­omy phi­los­o­phy, while oth­ers had higher debt bur­den and less spend­ing power due to the higher prices of goods.

Re­gard­ing the gov­ern­ment’s wel­fare card project, most card­hold­ers said it would help in­crease liq­uid­ity and give a boost to the econ­omy.

Mean­while, TRIS Rat­ing ex­pects Thai­land’s gross do­mes­tic prod­uct (GDP) to grow by be­tween 3.3 per cent and 3.6 per cent this year, com­pared with 3.2 per cent last year, driven by a re­cov­ery in exports, con­tin­ued growth in the tourism in­dus­try, and a rise in house­hold ex­pen­di­ture.

How­ever, TRIS Rat­ing is still con­cerned about ex­ter­nal risk fac­tors such as risks to the global econ­omy, the high level of house­hold debt and the floods.

Among the sup­port­ing fac­tors for the growth are that exports will keep ris­ing in the sec­ond half of this year. The economies of Thai­land’s ma­jor trad­ing part­ners, such as the United States, Ja­pan and China, are im­prov­ing. These na­tions com­prise around 31 per cent of Thai exports by value.

The tourism in­dus­try is ex­pected to see strong growth this year. Tourism showed signs of re­cov­ery after a tem­po­rary drop due to the sup­pres­sion of zero-dol­lars tours. The crack­down, which af­fected Chi­nese tourists, took ef­fect in Septem­ber 2016. The Bank of Thai­land has fore­cast 35.6 mil­lion for­eign tourists in 2017.

House­hold ex­pen­di­ture will ex­pand in the sec­ond half of 2017. House­hold in­come in the agri­cul­tural sec­tor and re­lated busi­ness sec­tors is likely to im­prove as agri­cul­tural pro­duc­tion re­cov­ers.

More­over, in­come in the ex­port-ori­ented man­u­fac­tur­ing sec­tor and the tourism sec­tor will in­crease in the sec­ond half of the year as exports rise and for­eign tourist ar­rivals and tourism re­ceipts in­crease, ac­cord­ing to TRIS.

Pri­vate in­vest­ment will re­cover due to ex­pan­sions in ma­chin­ery and equip­ment sec­tor, and the con­struc­tion, it said.

The man­u­fac­tur­ing sec­tor will see im­prove­ment as exports rise. Con­struc­tion ex­pen­di­ture will rise be­cause of in­crease in the num­ber of per­mit­ted con­struc­tion ar­eas.

Public in­vest­ment is ex­pected to speed up over the re­main­der of this year as dis­burse­ments from the an­nual gov­ern­ment bud­get and the sup­ple­men­tary bud­get frame­work both in­crease, TRIS es­ti­mated. Dis­burse­ments of in­stal­ment pay­ments, as re­quested by project con­trac­tors, will also in­crease.

US eco­nomic poli­cies, such as trade pol­icy or the im­ple­men­ta­tion of trade mea­sure to limit un­fair com­pe­ti­tion from other coun­tries, may af­fect in­vestor con­fi­dence. Other ex­ter­nal risk fac­tors in­clude the ef­fect of Brexit, the un­cer­tain mone­tary poli­cies of the US, Europe and Ja­pan, and the fluc­tu­a­tions of com­mod­ity prices world­wide.

Flood­ing in Thai­land will af­fect agri­cul­tural pro­duc­tion and farm in­comes, re­sult­ing in a rise in the level of house­hold debt and a slow­down house­hold con­sump­tion, it said.

TRIS RAT­ING RE­MAINS CON­CERNED ABOUT EX­TER­NAL RISK FAC­TORS SUCH AS RISKS TO THE GLOBAL ECON­OMY, THE HIGH LEVEL OF HOUSE­HOLD DEBT AND THE FLOODS.

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