Thailand’s growth ‘not as good as expected’
Mainly home-made problems are the reason that Thailand’s GDP growth could fall below 4 per cent this year, a prediction that the country’s Ministry of Finance gave on July 29. The growth revision came after the Bank of Thailand on July 19 sharply cut its own projection from 5.1 to 4.2 per cent and the National Economic and Social Development Board at the end of June cut its GDP growth expectations for 2013 to a range of 4.2 to 5.2 per cent from its earlier forecast of 4.5 to 5.5 per cent.
Besides a sluggish global recovery that puts pressure on Thailand’s export oriented economy, rising household debts are depressing purchasing power and domestic consumption, of which the latter contracted by 2.6 per cent in the second quarter of 2013 year-on-year. Thailand’s household debt is now a whopping 80 per cent of GDP, due to a lengthy low-interest environment, easy credit and the state’s first-time car buyer scheme.
Private investment also slumped by 5.1 per cent. A survey by Thai Chamber of Commerce found slowing economic growth in all regions except in eastern Thailand. Economists say Thailand would at least need a growth of 4 per cent to withstand the global economic headwinds and not to use too much of its foreign currency reserves to balance its economy.
Furthermore, this year’s budget will be affected by the high costs of the rice pledging scheme and lower rice exports.
Positive factors are a still very low (official) unemployment rate below 1 per cent and slightly higher incomes due to the new minimum wage policy. However, to bring the economy back on the real growth track, only massive government spending would help, the economists argue. Official second-quarter GDP data will released on August 19.
Many hopes are pinned on rising income from tourism which has been on a steady rise over the past years. However, many are concerned that Thailand’s continuing political conflicts would affect tourism and consequently the country’s economic situation during the remaining months of the year.
Mainly home-made problems are the reason that Thailand's GDP growth could fall below 4 per cent this year, a prediction that the country's Ministry of Finance gave on July 29. The growth revision came after the Bank of Thailand on July 19 sharply cut its own projection from 5.1 to 4.2 per cent and the National Economic and Social Development Board at the end of June cut its GDP growth expectations for 2013 to a range of 4.2 to 5.2 per cent from its earlier forecast of 4.5 to 5.5 per cent. Besides a sluggish global recovery that puts pressure on...
Mainly home-made problems are the reason that Thailand’s GDP growth could fall below 4 per cent this year, a prediction that the country’s Ministry of Finance gave on July 29. The growth revision came after the Bank of Thailand on July 19 sharply cut its own projection from 5.1 to 4.2 per cent and the National Economic and Social Development Board at the end of June cut its GDP growth expectations for 2013 to a range of 4.2 to 5.2 per cent from its earlier forecast of 4.5 to 5.5 per cent.
Besides a sluggish global recovery that puts pressure on Thailand’s export oriented economy, rising household debts are depressing purchasing power and domestic consumption, of which the latter contracted by 2.6 per cent in the second quarter of 2013 year-on-year. Thailand’s household debt is now a whopping 80 per cent of GDP, due to a lengthy low-interest environment, easy credit and the state’s first-time car buyer scheme.
Private investment also slumped by 5.1 per cent. A survey by Thai Chamber of Commerce found slowing economic growth in all regions except in eastern Thailand. Economists say Thailand would at least need a growth of 4 per cent to withstand the global economic headwinds and not to use too much of its foreign currency reserves to balance its economy.
Furthermore, this year’s budget will be affected by the high costs of the rice pledging scheme and lower rice exports.
Positive factors are a still very low (official) unemployment rate below 1 per cent and slightly higher incomes due to the new minimum wage policy. However, to bring the economy back on the real growth track, only massive government spending would help, the economists argue. Official second-quarter GDP data will released on August 19.
Many hopes are pinned on rising income from tourism which has been on a steady rise over the past years. However, many are concerned that Thailand’s continuing political conflicts would affect tourism and consequently the country’s economic situation during the remaining months of the year.
