Porametee Vimolsiri, secretary general of the National Economic and Social Development Board (NESDB)
Porametee Vimolsiri, secretary general of the National Economic and Social Development Board (NESDB)

Data reinforces optimism for economy

Economy February 20, 2018 01:00


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GROWTH in the country’s economy is on track to accelerate this year after a strong final-quarter performance to close out last year, the National Economic and Social Development Board (NESDB) said yesterday.

Gross domestic product expanded 4 per cent in the last quarter of 2017 from the same period a year earlier, helping full-year growth to come in at 3.9 per cent, up from 3.3 per cent from 2016, said Porametee Vimolsiri, secretary general of the agency-level state think-tank.

Seasonally adjusted, the economy in the fourth quarter expanded 0.5 per cent quarter on quarter, suggesting sustained expansion, he said.

Although the economic expansion from October to December decelerated from a 4.3 per cent rise in the third quarter, Porametee said the 4 per cent gain showed that “growth remained robust”.

A contraction of 1.3 per cent in farm sector output, caused by widespread floods and amid volatile weather conditions, was largely to blame for the quarter-on-quarter easing in GDP growth for the final three months of 2017. 

In contrast, output in the non-agricultural sector rose 4.6 per cent, accelerating from 4 per cent in the third quarter of 2017. Hotels and restaurants achieved the highest growth rates, at 15.3 per cent, due to the boom in tourism. All economic sectors of non-farm sectors grew, except construction, which contracted by 5.3 per cent, due to a decline in construction in both the private and public sectors.

Private consumption rose 3.5 per cent from the same period of the prior year, largely due to consumers buying more durable goods. 

Also contributing to the increased consumption are workers’ rising incomes in the non-farm sector, higher consumer confidence, the government’s welfare card for low income-earners and low inflation. Private investment increased 2.4 per cent year on year, slightly down on the 2.5 per cent in the third quarter.

Public investment declined 6 per cent, due to the slower pace spending on items outlined in the government’s budget and that was a factor in the quarter-on-quarter decline in GDP growth, Porametee said.

“Public investment should be back on track in the first quarter of this year, “ he said.

The enforcement of an amendment to a law on public procurement last year was blamed for the slowdown in public investment as authorities adjusted their practices to meet requirements of the new legislation.

Porametee said public investment would contribute significantly to economic growth in 2018.

In the fourth quarter of last year, the exports of goods in dollar terms expanded 11.6 per cent year on year.

The NESDB forecast that economic growth will accelerate this year in the range of 3.6 per cent to 4.6 per cent.

Stronger global economy

The strengthening recovery in the global economy would boost Thailand’s exports by an estimated 6.8 per cent in dollar terms.

However, the stronger baht may hurt the outlook for exports, the think tank says.

Should the US Federal Reserve raise its benchmark interest rate three times this year as the markets expert, the US dollar is likely to appreciate, so gains in the baht would likely be contained, said Porametee.

He said volatility in the farm sector required monitoring this year.

The farm price index dropped 0.2 per cent in the fourth quarter of last year, due to declining prices for rubber and palm oil that affected farmers in parts of the Southern region.

The permanent secretary for finance, Somchai Sujjapongse, said he was worried about impact of a stronger baht on Thailand’s export competitiveness.

The baht rose 3.53 per cent against the US dollar early this year and has increased 1.59 per cent under a trade-weighted currency index this year, he said.

He has called on the Bank of Thailand to do more to prevent further strengthening of the baht. 

The Finance Ministry has done its part by paying foreign debt in advance and requiring state enterprises to accelerate imports of machines or raw materials for investment purposes, Somchai said.

Don Nakornthap, the central bank’s director of macroeconomic policy office, said the GDP growth rate in the fourth quarter of last year was lower than its forecast of 4.4 per cent.

Risk factors this year includes whether the momentum in household consumption can be maintained, the direction of US trade policy and geopolitical issue, he said.