Exports and investments rising
Thailand’s Deputy Prime Minister Somkid Jatusripitak said positive indicators released last week were grounds for optimism about the steadily recovering economy as investment applications rose 98 percent during the first quarter of 2016, and trade figures showed that exports, the chief driver of growth, rose for the second straight month after a long period of sluggishness.
In addition, Huawei Technologies’ announcement that it will set up a headquarters in Bangkok, the opening of a regional research and development center by Nissan Motors Corporation, and comments by AirAsia founder Tony Fernandes suggestion that his company is considering establishing a headquarters in the Kingdom were evidence that the economy is moving in the right direction and that investors still view Thailand favorably, Somkid said.
Board of Investment (BoI) Secretary-General Hirunya Suchinai was beaming last week as she announced that the 98 percent rise in applications submitted to her agency during the first three months of 2016, compared to the same period last year, was accompanied by a 234 percent rise in total investment value during the same period.
The BoI approved a total of 311 projects that applied for incentives with an investment value of $2.5 billion. Hirunya said the value of project investment in March alone was over $1.5 billion, or 420 percent above the same month in 2015.
Japan was the largest investor during the first quarter, followed by the Netherlands. Automobiles and parts attracted the most funds. Hirunya said that she expects growth will top $2.8 billion in the second quarter.
The figures suggest that foreign investors are regaining confidence in the Thai economy after having taken a ‘wait-and-see’ approach during the past two to three years.
The Thai economy relies on three pillars: exports, investment and consumption. All three have been weak in recent years, in part because of a period of domestic political instability that has ended, and because of the tepid global economy. Low growth in important markets, and especially the slowdown in China, has negatively affected Thai exports. Although consumption has been growing in importance as a component of growth, it still lags behind exports.
Despite these various weaknesses, Thailand has still posted positive gross domestic product growth figures throughout recent years, and Somkid maintains that the fundamentals of the economy remain strong.
In the region, emerging economies enjoying spurts of growth from a low base, and consumption-led economies have outpaced Thailand’s growth. But the Kingdom’s advantages in infrastructure, location, diversity of products and services, and it’s long track record of openness to trade and investment mean that Thailand has a strong base on which to engineer a new period of higher growth.
Thai exports registered modest increases for the second straight month, rising 1.3 percent on shipments of automobiles, machinery and gold, according to the Customs Department. The performance ran contrary to expectations. A Reuters poll of economists predicted a 4.6 percent fall for the month.
Shipments in March were worth $545 million while imports were at $456 million, for a trade surplus of $89 million for the month. Exports to several traditional markets still fell, however, signaling that the export situation remains challenging.