BoT sees 3.4% growth this year

The Bank of Thailand expects an export recovery to contribute to higher GDP growth over the next two years. (Photo by Apichart Jinakul)

The Thai economy will continue its steady upward climb, growing by 3.4% this year and 3.6% next year as exports improve, the Bank of Thailand said on Friday.

Gross domestic product (GDP) expanded by 3.2% last year and by 2.9% in 2015.

Jaturong Jantarangs, a central bank assistant governor, said a steady recovery was being seen in exports of many products. The value of merchandise exports is forecast to expand by 2.2% this year led by electrical and electronic goods and the relocation of manufacturing to Thailand of products such as vehicle tyres and solar cells, he said.

The US dollar value of the country’s exports was flat last year but that was a modest improvement after three years of contractions. The National Economic and Social development Board recently projected that the value of goods exports would rise by 2.9% this year.

Exports in January this year grew by 8.8% from the same month a year earlier. However, they slipped 2% in February, only because the figures for February 2016 were artificially inflated by large one-off shipments of gold and aircraft.

Mr Jaturong said export prices of commodities and petroleum-related products were on an upward trend along with crude oil prices. Exports of services have experienced a quick recovery and are projected to continue to expand, he added.

Tourism, a major foreign currency earner, is expected to be helped by visa fee incentives and the Chinese government’s restriction on sales of tour packages to South Korea. This should bring more Chinese tourists to Thailand, building on a recent recovery that followed steep declines when the Thai government cracked down on zero-dollar tours marketed to Chinese visitors.

Mr Jaturong said private consumption was expected to continue recovering because of improvements in farm income and a positive income outlook for households in the service sector.

As well, he said, purchasing power should improve as household debt levels fall now that most people have finished paying off loans taken out under the first-car incentive programme in 2012-13.

However, overall income and employment levels have not yet benefited from the recovery in merchandise exports because the export improvements were largely concentrated in sectors that relied more on machinery rather than labour for production.

Business loans are showing signs of higher growth, especially working capital extended to exporters and agriculture-related commercial businesses, Mr Jaturong said.

Private investment is also reviving in some sectors such as telecommunications, electronics and alternative energy.

The central bank expects headline inflation to average 1.2% this year, compared with 0.2% last year, and to rise to 1.9% next year.

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