NESDB tips GDP growth at 4.5-5.5%
After better-than-expected growth of 6.4 per cent last year, the economy is expected to continue revving by 4.5-5.5 per cent this year despite constraints on labour-intensive industries from higher wages, the euro-zone crisis and the strong baht.
"The economy has recovered fully from the flood disaster," Arkhom Termpittayapaisith secretary-general of the National Economic and Social Development Board (NESDB), said yesterday. "Bolstering growth this year is the improvement in the global economic situation, as witnessed in the US, China and the euro zone, which will boost export volume and value.
"Coupled with recovery in electronics manufacturing, wage-induced increases in consumption and infrastructure investment, gross domestic product will further expand by 4.5-5.5 per cent this year."
The think-tank forecasts export growth at 11 per cent this year with an 8.9-per-cent rise in total investment and a 3.5-per-cent advance in household consumption.
The NESDB's GDP growth forecast dovetails with the central bank's projection of 4.9 per cent. Risks to growth are constraints on the expansion of labour-intensive industries after the increase in the minimum wage and the weakening of the European economy. The baht's appreciation will also likely crimp exports and the overall economy. Oil prices will likely move up on economic expansion, and that could give some impetus to inflation. This year's inflation rate should fall in a range of 2.5-3.5 per cent, according to the NESDB.
Economists were surprised at the economy's performance in the final quarter of last year, when it jumped 18.9 per cent year on year - much higher than the consensus and beating even HSBC's best-case guess of 17 per cent. Moody's Analytics had pegged the growth rate for the quarter at 14 per cent with a lift from the low-base effect from the devastating floods in late 2011.
"Looking beyond the bias, however, the domestic economy continues to expand at a decent clip, supported by robust household and investment spending," Moody's Analytics said in its report. "The government's minimum-wage laws and numerous handouts are supporting private consumption, while infrastructure development and steady foreign investment are driving greater capital accumulation.
"Exports have also improved in line with stronger demand for autos, smart phones and tablets."
In the last quarter, Thailand enjoyed increases of 12 per cent in household consumption and government expenditures, 21.7 per cent in private investment and 31.1 per cent in public investment. Manufacturing output picked up 37.4 per cent, compared with a 1.1- per-cent contraction in the third quarter, given industrial recovery, production ramp-ups and record car production.
Exports also swelled 18.2 per cent while the tourism industry galloped 25.4 per cent, with a 39.3-per-cent surge in tourist arrivals to 6.3 million. Tourism revenue jumped 45 per cent year on year.
The only sequential contraction was in agriculture, with output slipping 2.8 per cent year on year.