TRIS Rating expects Thailand’s gross domestic product (GDP) will grow by between 3.3 per cent and 3.6 per cent this year, compared with 3.2 per cent last year, driven by a recovery in exports, continued growth in the tourism industry, and a rise in household expenditure.
However, TRIS Rating is still concerned about external risk factors such as risks to the global economy, the high level of household debt and the floods in Thailand.
Among the supporting factors for the growth are that exports will keep rising in the second half of this year. The economies of Thailand’s major trading partners, such as the United States, Japan and China, are improving. These nations comprise around 31 per cent of Thai exports by value.
The tourism industry is expected to see strong growth this year. Tourism showed signs of recovery after a temporary drop due to the suppression of zero-dollars tours. The crackdown, which affected Chinese tourists, took effect in September 2016. The Bank of Thailand has forecast 35.6 million foreign tourists in 2017.
Household expenditure will expand in the second half of 2017. Household income in the agricultural sector and related business sectors is likely to improve as agricultural production recovers. Moreover, income in the export-oriented manufacturing sector and the tourism sector will increase in the second half of the year as exports rise and foreign tourist arrivals and tourism receipts increase, according to TRIS.
Private investment will recover due to expansions in machinery and equipment sector, and the construction, TRIS said.
The manufacturing sector will see improvement as exports rise. Construction expenditure will rise because of increase in the number of permitted construction areas.
Public investment is expected to speed up over the remainder of this year as disbursements from the annual government budget and the supplementary budget framework both increase, TRIS estimated. Disbursements of instalment payments, as requested by project contractors, will also increase.
US economic policies, such as trade policy or the implementation of trade measure to limit unfair competition from other countries, may affect investor confidence. Other external risk factors include the effect of Brexit, the uncertain monetary policies of the US, Europe and Japan, and the fluctuations of commodity prices worldwide.
Flooding in Thailand will affect agricultural production and farm incomes, resulting in a rise in the level of household debt and a slowdown household consumption, TRIS said.