GDP growth shifts into higher gear

Economy November 21, 2017 01:00


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THE country’s economy grew at a heady 4.3 per cent in the third quarter, the highest rate posted for 18 quarters, Porametee Vimolsiri, secretary general of the National Economic and Social Development Board (NESDB) , said yesterday.

After seasonal adjustments, the rise in gross domestic product (GDP) was 1 per cent from the previous quarter.

Growth in exports, in US dollar terms, jumped 12.5 per cent year on year, compared with an 8 per cent rise in the second quarter, Porametee said. That expansion was driven by the global economic recovery, and the growth rate was the highest in 19 quarters.

However, private investment growth slowed to 2.9 per cent, compared with 3.2 per cent growth in the second quarter. Private consumption expanded 3.1 per cent, up slightly from the 3 per cent growth rate achieved previously.

Public investment shrank by 2.6 per cent, compared with a contraction of 7 per cent in the previous quarter, due to a high base last year and a slow start to some projects.

The state planning agency is now forecasting full-year GDP growth of 3.9 per cent, up from the 3.7 per cent growth it had previously predicted.

The economy expanded by 3.3 per cent and 3.8 per cent in the first and second quarters, respectively. The NESDB projects next year’s GDP growth rate will be 4.1 per cent.

Despite the acceleration in economic growth, people are unsatisfied with their living standards, a poll indicates, with most respondents wanting to see the current team of economic ministers replaced in a coming Cabinet reshuffle.

In response to a question on when the fruits of this growth would be enjoyed by people at the grassroots level, Porametee said that it would take a while before they could get higher incomes.

“People might have been used to higher growth rates in the past, in the years before 2013-2014, but now that the growth rate is entering 4 per cent, it would take a while before it would benefit SMEs and the grassroots people,” he said, referring to small and medium-sized enterprises.

The agricultural sector expanded slowly but remained high, at 9.9 per cent, compared with 16.1 per cent growth in the second quarter. Labour in the agricultural sector accounted for 33 per cent of the total employed in all sectors. Farmers’ incomes dropped 2.6 per cent in the third quarter.

Growth in the non-agricultural sector quickened to 3.8 per cent, from 2.8 per cent rise in the previous quarter, due to expansion in manufacturing; trading and repairing; electricity, gas, and water supply, according to the NESDB.

However, growth slowed slightly in the tourism-related service sectors covering hotels and restaurants, as well as in the transport and communications sectors.

Manufacturing production increased by 4.3 per cent, accelerating from 1.1 per cent growth previously. It was the highest expansion over the past 19 quarters and was largely due to gains in export-oriented manufacturing. In particular, this included the food and beverage sector, chemicals and chemical products, rubber and plastic, electrical appliances, and motor vehicles.

Hotels and restaurants posted growth of 6.7 per cent, compared with a 7.5 per cent rise in the previous quarter. This was because a slowdown in growth in the number of tourists, at 6.4 per cent, compared with 8 per cent growth in the second quarter. The total number of tourists was 8.8 million, against 8.1 million in the previous quarter. “The number of tourists continued to grow and contributed to economic growth,” said Porametee.

The global recovery would continue to support exports, and public investment was expected to accelerate, Porametee said, adding that private investment would also continue to grow and key economic sectors are expected to expand further next year. 

Deputy Prime Minister Somkid Jatusripitak said the government next year would focus on improving the economy in provincial areas in order increase the purchasing power of rural people. He said he had consulted with Interior Minister General Anupong Paochinda to use the accumulated savings of local governments to finance grassroots economic development projects. Local communities would also be invited to propose their own development projects, he said.

The government would also accelerate large public investment projects in the Eastern Economic Corridor, and this investment should benefit SMEs as the supply chains of large companies would expand, he added.