Economists eye 3.2-4.5% growth in Thailand's GDP

business February 15, 2016 15:48

By The Nation

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Thailand's economy is expected to maintain growth momentum this year, with economists projecting a wide range of growth in gross domestic product.

The National Economic and Social Development Board today unveiled the 2016 projection at the range of 2.8-3.8 per cent, or the average of 3.3 per cent. This is lowered from the previous projection of 3-4 per cent.
While UOB pens the 3.2 per cent rate, DBS projects the 3.4 per cent rate. Maybank Kim Eng Securities (Thailand) turned out to be the most optimistic, expecting the growth rate to hit 4.5 per cent. 
"For 2016, domestic demand is being stimulated by the government, amid challenges facing exports that are a result of global issues. We believe that government infrastructure investment and incentives for private investment are going to boost Thai economic growth this year," said economistTim Leelahaphan. 
Gundy Cahyadi, DBS economist, said in his research note that public spending would continue being the key driver to growth. 
"That the government is supporting the economy is good news. But it underscores the sluggishness of private demand. And given that export growth is forecast at 1.2 per cent clearly indicates that the authorities are not expecting any boost from the external demand."
Manop Udomkerdmongkol of UOB also expected a boost from continued improvement in tourism sector, accelerated disbursement of public spending and recent fiscal stimulus measures. "Nevertheless, this is likely to be offset by the persistently weak performance of merchandise exports," he said.
The NESDB announced today that growth rate in 2015 was 2.8 per cent.
"Public spending and investment will remain the key growth factor. We expect budget disbursement this year to hit Bt2.54 trillion or 93.4 per cent of total," said Poramatee Vimolsiri, secretary general of the think tank.
He added that state enterprises' investment disbursement should amount to Bt444 billion or 75 per cent of total. Meanwhile, infrastructure investment, based on the number of 20 projects ready for implementation this year, should also reach Bt66.83 billion. 
He asserted that the Thai economy would also benefit from low oil prices, which  should fall to US$32-$37 per barrel, the lowest in 13 years. The dollar/baht exchange rate should also weaken to Bt35.5-Bt3.5 per dollar, from Bt34.29 in 2015, on anticipation that the US rate should hike this year.
Manop said that as the economy picks up, the Bank of Thailand is expected to keep the policy rate unchanged at 1.50 per cent when it convenes on March 23. It expects the baht to weaken against US dollar to Bt36.20 per dollar at the end of this quarter.
Cahyadi is of the view that if there is any change in the policy rate, it will be a hike. However, this would happen  only when GDP growth returns to 3.5 per cent "which could be in the early-2017 at the earliest".