THE FEDERATION of Thai Industries agrees with the National Economic and Social Development Board's (NESDB) assessment that the excellent performance of the tourism industry should be able to offset the contraction in exports.
“I think yes, the expansion in the tourism sector should be to able cover the slowdown of the export sector in terms of revenue, as the baht has depreciated by 7-8 per cent since the beginning of the year, which should compensate in the balance of payments.
“But I’m not sure about its impact on economic growth,” Supant Mongkolsuthree, chairman of the FTI, said yesterday.
The expansion in tourism alone would not be able to compensate for the slowdown in economic growth, as exports account for 65 per cent of gross domestic product, so the private sector is hoping that government investment will start to kick in by this quarter or the next.
The NESDB yesterday lowered its GDP forecast for this year from 3-3.5 per cent to 2.7-3.2 per cent after revealing that the economy was able to expand by 2.8 per cent in the second quarter, feebler than 3 per cent in the first quarter. However, seasonally adjusted, the economy was able to expand by 0.4 per cent from the first quarter, while all together, the economy grew by 2.9 per cent in the first half.
The FTI is expected to revise down its 3-per-cent GDP growth prediction next month.
Supant said the expansion forecast of 2.9 per cent or so by the NESDB is achievable only if the government starts spending on projects.
“What will cover, almost 100 per cent, of the decline of revenue from the export sector is the remarkable growth of the tourism sector while government spending, on new projects, will be more apparent in this quarter and should be able to support economic growth this year,” said Arkhom Termpittayapaisith, deputy transport minister and secretary-general of the NESDB.
The office expects exports of goods to contract by 3.5 per cent this year, as exports were recorded at US$105.7 billion in the first half, which was a 4.9-per-cent drop from the same half last year. Export volume has contracted by 3.2 per cent and prices by 1.8 per cent in the same period.
The NESDB believes that tourist arrivals could reach 30 million this year, surging from 25.7 million last year, while the Tourism Ministry expects 28.8 million. Inbound and domestic tourists are expected to generate Bt2.3 trillion in revenue this year.
Arkhom said one of the new projects expected to start this year is the Pattaya and Map Ta Put motorway with an estimated cost of Bt20.2 billion. It is expected to begin the auctioning process before the end of the year, and the acceleration of the Bt40 billion stimulus package for water management and road construction projects gained budget approval from the Revenue Department this month. Construction is expected to commence according to the signed contracts within this quarter.
“The Pattaya-Map Ta Put route is the most ready since it will be partly financed by the Bt14 billion toll-fee fund that has been accumulated by the Inter City Motorway Division of the Department of Highways, while the other two routes, Nonthaburi’s Bang Yai district to Kanchanaburi and Ayutthaya’s Bang Pa-in district to Nakhon Ratchasima, will be more apparent next year as they will be funded by loans,” Arkhom said.
Pimonwan Mahujchariyawong, deputy managing director of Kasikorn Research Centre, agreed that the Pattaya-Map Ta Put route is the most apparent new government investment this year. The research house is revising its GDP growth forecast of 2.8 per cent pending an assessment of whether the increase in tourism will be able to compensate for the slowdown of the export sector. The Bank of Thailand is also expected to revise down its 3-per-cent GDP growth forecast at the next meeting of its Monetary Policy Committee next month.
Chirathep Senivongs Na Ayudhya, central bank spokesman, said the 2.8-per-cent growth in the second quarter, as revealed by the NESDB, was expected by the central bank. It reflects that the economy is still gradually recovering.
“The MPC expects the economy to be slower in the second quarter compared to the first quarter but quarter-to-quarter expansion should continue to be higher partly from the increase in the government’s injection of capital into the economic system,” he said.