Thailand’s economic growth will remain resilient, above 3 per cent in both 2017 and 2018, according to Allianz Economic Research’s latest analysis.
Lifting private confidence will be pivotal to move economic growth upwards and initiate a sustainable growth pace, it said.
Despite the insurance market losing some of its momentum for the fourth year in a row, premium income reached 4.9 per cent of gross domestic product in 2016, putting Thailand on par with Germany with respect to insurance-market penetration, said Dr Michael Heise, chief economist of Allianz SE Germany, the major shareholder of Allianz Ayudhya Assurance.
Against the background of an ageing population, Thailand’s old-age dependency ratio is set to leap from 15.2 per cent now to 52.5 per cent in 2050. Allianz expects life insurance to remain the major growth driver over the next decade, averaging around 9.3 per cent.
Overall, global output is likely to expand by about 2.8 per cent this year. Industrialised countries are expected to register GDP growth of 1.9 per cent, while in emerging markets growth could increase to 4.1 per cent, Heise said.
He said strong competitive advantages such as competitive prices and strategic location as well as rising foreign demand would support a rise in Thai exports and tourism-related revenues.
With public debt at 43 per cent of GDP (lower than the 60-per-cent ceiling), the existing fiscal space will be used to support growth in the form of public investment. But lifting private confidence will be essential. For now, private expenditures are the main Achilles’ heel of the economy with limited growth of private credit, weak corporate confidence and low inflows of foreign direct investment.
As for the Thai insurance industry, Heise said that since 2012, the market has been losing some of its momentum. For the fourth year in a row, premium-income growth slowed in 2016, to 3.9 per cent. According to preliminary figures, property and casual insurance shrank by 2.1 per cent for the first time since 1999, while life-insurance growth picked up slightly to 6.6 per cent.
Regarding per capita insurance spending, which amounted to Bt10,290, Thailand lost its lead and is now level with China, which closed the gap thanks to a 23.1-per-cent surge in insurance-premium income last year.
Life insurance makes up 70 per cent of total premium income in Thailand. This is in line with the results of a World Bank survey, in which 65 per cent of adult respondents said they saved for old age.
Heise said the world economy currently found itself in fairly good shape and had made a positive start to 2017. Global output is likely to expand by about 2.8 per cent in 2017, compared with 2.5 per cent in 2016.
Industrialised countries are expected to register GDP growth of 1.9 per cent, while in emerging markets growth could increase to 4.1 per cent from the 3.7 per cent seen in 2016.