FPO projects 3.3% export uptick
Use of mid-year budget affects growth
The Fiscal Policy Office (FPO) has raised its 2017 export growth forecast to 3.3% but is maintaining its economic growth projection at 3.6%.
The upward revision of its 2017 export growth forecast from 2.5% predicted in January should have minimal effect on the overall economic growth estimate, said director-general Krisada Chinavicharana.
The 160-billion-baht mid-year budget to be pumped into the rural economy through provincial clusters and Village Funds will be the determinant factor if economic growth can reach 4%, he said.
If the mid-year budget is totally drawn down this year, it will have a big impact on the Thai economy, said Mr Krisada. The FPO estimated only 60% of the budget will be taken out.
He said 74 billion baht of the 160-billion budget has already been allocated, while 10 billion has been disbursed.
In January the Finance Ministry’s think tank raised its Thai GDP target from 3.4% in response to an acceleration in state spending, higher farm income in line with rising commodity prices, improving private consumption, a solid tourism sector and an export rebound.
The FPO’s growth estimate is in line with the Bank of Thailand’s forecast, raised last month to 3.4%, and the National Economic and Social Development Board’s forecast of a range of 3-4%.
Given the strong export growth, improving farm prices and domestic consumption rebound, it is possible to see economic growth surpass the 3.1% FPO projection for the first quarter, said Mr Krisada.
The country’s outbound shipments for March fared better than expected, jumping 9.2% year-on-year after February’s 2.8% drop. For the first three months of 2017, exports rose 4.9% to US$56.5 billion (1.95 trillion baht), the highest rate in four years.
He said the brighter export growth forecast was in response to the FPO’s economic growth estimate for Thailand’s trade partners of 3.51% this year, up from 3.41% previously predicted.
The FPO predicted the baht will average 35.5 to the dollar this year, compared with 34.99 on average year-to-date. It projected the country’s inflation will stand at 1.4%.
Issues warranting close monitoring include trade partners’ economic recovery, fluctuation in the global financial markets, uncertainties over the US trade policy and the European politics, as well as geopolitical tensions, said Mr Krisada.