ADB hikes Thai GDP out­look on strong H1

The Myanmar Times - Weekend - - International Business -

THE Asian De­vel­op­ment Bank (ADB) has raised Thai­land’s eco­nomic growth fore­cast to 4.5pc this year and 4.3pc in 2019 af­ter ro­bust growth of 4.8pc in the first half amid im­prov­ing eco­nomic prospects.

“Look­ing ahead, we see high con­sumer con­fi­dence sup­port­ing do­mes­tic de­mand and the gov­ern­ment’s wel­fare pro­gramme for low-in­come earners help­ing prop up do­mes­tic de­mand,” Thiam Hee Ng, a se­nior econ­o­mist at ADB, said as the global lender launched its “Asian De­vel­op­ment Out­look 2018 Up­date: Main­tain­ing Sta­bil­ity Amid Height­ened Uncer­tainty”.

Pub­lic in­vest­ment should re­main strong based on the gov­ern­ment’s big-ticket in­fra­struc­ture in­vest­ment, while ex­ports and tourism should also con­tribute to growth, Mr Ng said.

Hav­ing per­formed well in the first half, ex­ports should con­tinue to con­tribute to growth both this year and next. The dol­lar value of mer­chan­dise ex­ports is fore­cast to con­tinue to ex­pand at an an­nual rate of 10pc this year and next. While man­u­fac­tur­ing will be the main source of ex­ports, agri­cul­tural ex­ports should also hold up well.

But high house­hold debt of 77pc of GDP at the end of the first quar­ter may con­strain house­hold spend­ing, ac­cord­ing to the lat­est re­port.

ADB’S out­look sup­ple­ment re­port is­sued in July up­graded Thai­land’s eco­nomic growth out­look to 4.2pc from 4pc pre­dicted in the April re­port but kept its fore­cast for 2019 un­changed at 4.1pc.

The Manila-based in­sti­tute’s lat­est view is more op­ti­mistic than the Bank of Thai­land’s fore­casts of 4.4pc this year and 4.2pc in 2019.

Mr Ng said Thai­land’s in­fla­tion re­mains be­nign at 1.3pc this year and 1.4pc next, hov­er­ing at the bot­tom end of the Bank of Thai­land’s tar­get range of 1-4pc.

In the first eight months of this year, head­line in­fla­tion year-on-year av­er­aged 1.1pc and core in­fla­tion av­er­aged 0.7pc, both up from 0.6pc in the same pe­riod last year.

Re­gard­ing the US Fed­eral Re­serve’s con­tin­u­ous rate hikes that have caused sev­eral emerg­ing mar­kets to come un­der pres­sure, he said that am­ple for­eign re­serves and a con­sid­er­able cur­rent ac­count sur­plus should safe­guard Thai­land from ex­ter­nal shocks.

The sec­ond-largest econ­omy in South­east Asia has in­ter­na­tional re­serves of more than US$200 bil­lion (6.49 tril­lion baht), enough to cover 10 months of im­ports and then some.

“With in­fla­tion­ary pres­sures edg­ing up but firmly un­der con­trol, and with the bal­ance of pay­ments still com­fort­able de­spite cap­i­tal out­flow and baht de­pre­ci­a­tion, the cen­tral bank kept its pol­icy in­ter­est rate un­changed at a low 1.5pc to sup­port the econ­omy and firm up the eco­nomic re­bound,” ADB said.

South­east Asia’s growth is fore­cast at 5.1pc this year, slightly lower than the pre­vi­ous view, as a com­bi­na­tion of fac­tors -- mod­er­a­tion in ex­port growth, softer do­mes­tic de­mand, sub­dued agri­cul­ture, higher in­fla­tion, net cap­i­tal out­flows and a wors­en­ing bal­ance of pay­ments -- is dim­ming the growth out­look for this year in six of the 10 economies in the sub­re­gion, the ADB’S up­dated re­port said.

The six economies are In­done­sia, Laos, Malaysia, Myan­mar, the Philip­pines and Viet­nam.

Thai­land and Brunei, by con­trast, look set to out­per­form ear­lier fore­casts, while Cam­bo­dia and Sin­ga­pore will likely meet prior pro­jec­tions, the re­port said. – Bangkok Post

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