GDP forecasts fall slightly
Recent slowdown prompts readjustment
An ebb in the third quarter has prompted the state planning agency to cut its GDP growth forecast for 2016 from 3.3% to 3.2%, and next year’s forecast to a range of 3-4%.
The National Economic and Social Development Board (NESDB) said yesterday that Thai GDP grew by 3.2% yearon-year in the July-September period as consumption and public spending slowed from 3.5% growth in the second quarter.
Seasonally adjusted quarter-on-quarter growth was 0.6%, down from a revised 0.7% in the second quarter.
For the first nine months, the economy registered 3.3% growth on average.
NESDB secretary-general Porametee Vimolsiri said the main engine of growth for the quarter was the expansion of nonagricultural production, mainly contributed by service-related sectors, especially tourism. The agricultural sector showed rebound growth after seven consecutive quarters of decline.
Annual growth in public investment and household spending slowed i n the third quarter while private investment contracted.
Mr Porametee said the economy may slow down further in the fourth quarter because of weak sentiment and cutbacks in entertainment since the passing of King Bhumibol Adulyadej on Oct 13.
A crackdown on cheap tours has reduced the number of visitors from China, one of Thailand’s biggest tourism markets.
The NESDB reckons the economy will grow by 3.2% in 2016, with exports staying flat. Previously it forecast 3.0-3.5% growth or an average of 3.3% for this year, while exports were projected to fall 1.9%.
The government’s think tank predicts that GDP in 2017 will grow 3-4% and exports expand 2.4%. Last year GDP grew 2.8%.
Key supporting factors for next year’s growth include a recovery of the export sector, which will support the growth of manufacturing and private investment; recovery and acceleration of agriculture; a continued high growth of public investment; and continued tourism growth. The value of export of goods, private consumption and total investment are predicted to grow by 2.4%, 2.7%, and 5%, respectively. Headline inflation rate will be in the range of 1-2% and the current account will register a surplus of 10.2% of GDP.
HSBC said in a research note that Thailand’s economic growth appears to be more stable, even though it is relatively weak compared to prior records.
The bank said third-quarter growth was more dependent on net service exports compared with the previous two quarters, which showed more contribution from domestic demand growth. This is likely due in part to low household income growth and sluggish private investment.
“NESDB reaffirmed its outlook for 2016 growth at 3.2% and expects 2017 growth to be 3-4%, supported by an improvement of exports and continued growth of total consumption and public investment,” HSBC said. “In any case, there remain some downside risks to growth in the quarters ahead, especially from external uncertainties such as weak global trade recovery and political developments in major economies.”
“We remain unconvinced about continued goods export recovery since the Nikkei Thailand Manufacturing Purchasing Managers’ Index showed a contraction in both September and October in new export orders. At home, more of the public infrastructure investment projects have been approved and progressed to the bidding process in recent months. But higher debt among households and small businesses is likely to remain a drag on domestic demand growth. We expect Thailand’s GDP growth to remain at a moderate pace in 2017 before accelerating slightly in 2018. Coupled with limited inflationary pressures, it also expects the Bank of Thailand to maintain its policy rate at 1.5% for the foreseeable future.”
Don Nakornthab, senior director at the Bank of Thailand’s macroeconomic and monetary policy department, said that the recently announced 3.2% GDP growth in the third quarter is close to the BoT’s estimation.
“Developments in global economic recovery will require close monitoring, especially those related to the US’s policies and other factors including zero-dollar tours, recovery in exports and low private investment,” Mr Don said.