BoI putting faith in private investment to help push growth

Private investment is expected to remain active this year, with many hopeful it will shore up the economy to offset troubled exports.

Hiranya Sujinai, secretary-general of the Board of Investment (BoI), still believes that private investment will help to drive economic growth.

She said BoI-approved investment projects had imported 116 billion baht worth of machinery in the first six months, up from 109 billion in the same period last year. Higher machinery imports indicate that there is real investment this year.

“I believe private investment will help stimulate economic growth this year. Normally each year, we would have investment capital from approved projects worth 400-500 billion baht,” Mrs Hiranya said. She expects investment capital from approved projects to reach about 400 billion baht this year.

In the first half, the BoI approved 1,254 projects worth a combined 412 billion baht. It aims to approve 1,700 projects worth 1.4 trillion baht. In 2014, the BoI approved 744 projects worth 185 billion baht.

The National Economic and Social Development Board (NESDB) projected in May that private investment would grow by 3.8% this year.

The agency is today due to announce economic performance for the second quarter and its new forecast for the year.

In May, it announced economic growth of 3% in the first quarter, an improvement from 2.1% in last year’s fourth quarter.

On a seasonally adjusted basis, the NESDB reported 0.3% quarter-on-quarter growth.

The growth was mainly due to a nonagricultural expansion of 4.1% that was offset by an agriculture sector that shrank 4.8%.

Private consumption rose by 2.4%, improving on 2.1% growth in the previous quarter.

Consumption of durables continued to drop but showed a better rate than the previous quarter, while consumption of semidurables and non-durables increased at a decelerating rate.

General government consumption rose by 2.5% compared with 3.6% in the previous quarter. The growth reflected upturns in purchases of goods and services by 14.7% and fixed capital consumption by 5.3%, while employee compensation fell by 1.5%.

Gross fixed capital formation rose by 10.7% compared with 3.2% growth in the previous quarter. The surge was due mainly to public investment in construction and machinery rising by 37.8%.

Private investment grew by 3.6%, decelerating from an increase of 4.1% in last year’s fourth quarter.

The NESDB recently cut its full-year GDP growth forecast to 3-4% from an earlier prediction of 3.5-4.5% and lowered its export growth view to 0.2% from 3.5%.