FPO does about-face on GDP
Full-year view revised higher on bullish Q4
The Fiscal Policy Office (FPO) is optimistic that the economy will expand by 3% this year, a slightly higher projection than the previous forecast of 2.8%, says directorgeneral Krisada Chinavicharana.
Mr Krisada reasons that with Thailand’s GDP growth of 3%, 2.8% and 2.9% respectively in the first three quarters, the fourth quarter will keep the pace with help from high-season spending.
In addition, the aggressive moves of the government through numerous stimulus measures since September should begin to inject some liquidity into the system this quarter.
“The government’s frontloaded schemes should boost the purchasing power of consumers more or less during the festive season,” Mr Krisada said. “So the final three months of the year must be better than the first three quarters, and I am quite confident now that we will make 3% for the whole of 2015.”
This is the first instance this year of the FPO offering a more positive view after cutting its projection several times, most recently to 2.8%.
Most economists have sounded a more pessimistic note. The government’s think tank, the National Economic and Social Development Board (NESDB), has cut its GDP forecast several times to reach the current 2.9%.
On the other hand, Deputy Prime Minister Somkid Jatusripitak, who leads the government’s economic team, has voiced confidence that GDP growth will surpass 3% on the strength of the government’s stimulus schemes.
The first three months of fiscal 2016, which began in October, are tipped to see disbursement of 24 billion baht budgeted for local developments worth 1 million baht or less.
A total of 55,200 small projects have been approved under the budget with an overall investment of 22.7 billion baht so far.
Another boost comes from government loans to Village Funds to provide for tambon projects worth 5 million baht each out of a total budget of 37.9 billion baht.
More than 100,000 borrowers have received approval as more than 30 billion baht is gradually disbursed.
Moreover, 50% of the budget for government official training is to be disbursed by year-end.
“These projects are likely to go as planned, so the first quarter of fiscal 2016 [through the end of December] should reach our target of injecting liquidity worth 200 billion baht, higher than the 118 billion injected in the same period of fiscal 2015,” Mr Krisada said.
For other stimulus measures, such as regulatory changes to kick-start the property sector, soft loans for small and medium-sized enterprises and enhanced privileges extended by the Board of Investment, multiplier effects will start to show up next year.
In October, the consumer confidence index was positive for the first time in 10 months despite continued weakness in the export sector.
The FPO is maintaining its full-year forecast of a 5.4% decline in exports after an 8.1% contraction in October.
But the tourism sector remains intact, up 1% in October despite uncertainty and violence around the globe.
Finance Minister Apisak Tantiworawong has also reaffirmed that the economy next year will improved significantly after the Transport Ministry said six infrastructure projects worth a combined 180 billion baht have inked deals with contractors.
The expectation is for at least 20 projects valued at 1.6 trillion baht to gradually agree contracts with private companies.
“This is the good news, that once government investment kicks off it will really encourage private investment,” said Mr Apisak. “Next year we can grow by 3.8% for sure.”