Bangkok Post

CIMBT halves 2017 outlook for investment

Bank stands pat on GDP growth target

- SOMRUEDI BANCHONGDU­ANG

CIMB Thai Bank (CIMBT) has halved its estimate for the country’s private investment to 0.7% this year from an earlier forecast of 1.4%.

The move follows a contractio­n in Thailand’s private investment in the three months to March for a third consecutiv­e quarter.

Despite the lower projection for the segment, CIMB’s research unit is maintainin­g its economic growth forecast for this year at 3.2%, citing a stronger-than-expected expansion in the first quarter and the rosy outlook for other economic drivers.

Private investment has been at a low ebb due to the sluggish economic recovery both locally and globally, said head of research Amonthep Chawla, adding that despite the government’s efforts to ramp up state investment and set up the Eastern Economic Corridor, those measures have not been enough to restore private sector confidence.

He said it would take some time to see the crowding-in effect on private investment.

“Private investment will continue dropping in the second quarter, but is expected to pick up in the second half on the back of state spending and export growth. It will show positive growth this year, albeit at a marginal rate,” said Mr Amonthep.

CIMBT’s 2017 private investment forecast is far below the National Economic and Social Developmen­t Board and the Bank of Thailand’s estimates of 2% and 2.4%, respective­ly.

Private investment fell 1.1% in the first quarter of 2017, worse than the 0.4% contractio­n seen in the fourth quarter of 2016 and the 0.8% decline in the third quarter last year.

He said that his research house was still maintainin­g its economic growth forecast for this year after the economy in the first quarter expanded by 3.3% year-on-year — the fastest pace in three quarters.

Public investment is still a mainstay for Thai economic growth and the research house has raised its state investment growth forecast to 9.8%, up from 6.5%, said Mr Amonthep.

Strong recoveries in exports and the tourism outlook will be other drivers boosting the country’s economic growth, he said.

CIMBT raised its export growth forecast to 3.1% this year from a 0.6%-contractio­n forecast previously and import growth to 7.6% from 1.5%.

Thai exports expanded for a second straight month in April, rising by 8.5% year-on-year in April to US$16.9 billion

(575 billion baht) after a 9.2% jump in March. For the first four months of 2017, Thailand’s exports were up 5.7% to $73.3 billion, the highest rate in the past six years. Imports rose accordingl­y by 14.5% to $69.2 billion, yielding a trade surplus of $4.11 billion for the period.

To sustain the country’s economic expansion for the long-term, the government should play a smaller role in investment and encourage private investment, said Mr Amonthep.

State enterprise privatisat­ion, accelerati­on of private public partnershi­p projects,

relaxation of some investment regulation­s, and liberalisa­tion in some areas will help drive domestic investment, he said.

Meanwhile, CIMBT revised up its baht forecast to 35.50 against the greenback from 36.50 due to uncertaint­ies over US economic policy, said Mr Amonthep.

 ?? SEKSAN ROJJANAMET­A KUN ?? Labourers work at a constructi­on site in Bangkok. CIMBT expects private investment to lift in the second half on the back of state spending and export growth.
SEKSAN ROJJANAMET­A KUN Labourers work at a constructi­on site in Bangkok. CIMBT expects private investment to lift in the second half on the back of state spending and export growth.

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