Central Bank optimistic on 4 percent second half growth
The Bank of Thailand said last week that 4 percent growth in the third quarter and beyond is possible with sustained growth in exports and a boost from year-end festivities, as the EXIM bank reported healthy profits, and factory output rose 4.2 percent year on year in September.
“Thailand’s economic growth has improved based on strong export growth of 9.1 percent in the first nine months, with an all-time high of 13.4 percent registered in September,” said Don Nakornthab, senior director at the central bank’s economic and policy department.
Export growth would have to exceed 8 percent, and economic growth reach 4.1 percent during the second half of this year to push the full year gross domestic product growth total to 4 percent or higher. While that is possible, many analysts are expecting about 3.8 percent growth for 2017. That would still be a significant improvement over the stagnant rates of the last two to three years, and the trend is clearly towards economic acceleration.
Some are also expecting a strong final quarter based on increased consumption – one of the three main drivers of the Thai economy – because of the holiday season and the end of the official one-year mourning period for the late monarch King Bhumibol Adulyadej. Festivities and events were generally subdued or cancelled during that period out of respect for the monarchy and the feelings of the public.
Last week, Prime Minister Prayut Chan-o-cha asked the Finance Ministry yesterday to consider issuing another tax refund for shopping this year-end to stimulate consumption of durable goods.
Exports, which are the main driver of the economy, are also expected to continue their rebound, barring any external shocks. The export resurgence was reflected in the results posted last week by the Export-Import Bank of Thailand (EXIM Thailand). For the first nine months of the year, EXIM Thailand recorded a net profit of $30 million on outstanding loans of $2.5 billion, an increase of $313 million over the same period last year.
With the economy steaming ahead, factory output rose for the third straight month in September, as the manufacturing index was up 4.2 percent year on year for that month and bettered the forecast of 3.6 percent in a poll of analysts conducted by Reuters.
Tourism is also expected to do well, as the high season begins in November, and tourism is a significant source of foreign exchange. The tourism sector contributes roughly 10 percent to gross domestic product. Tourism officials are expecting between 33 million and 34 million tourists this year for a new record.