Standard Chartered bullish on Thai growth
Global financial institution Standard Chartered Bank has become bullish on Thailand’s growth prospects, forecasting last week that the economy will expand by as much as 4 percent in 2016 on a stronger second half, as the World Bank increased its growth forecast to a more modest 2.5 percent up from an earlier prediction of 2.2 percent for the year.
Usara Wilaipich, Standard Charter’s senior economist, predicted that full-year gross domestic product (GDP) growth would be 4 percent, with a 3.6 percent rise in the first half and a 4.4 percent increase in the second half. A number of factors would contribute to the steadily improving performance including the launch of infrastructure projects and legal changes to facilitate procurement and investment.
“These are the changes that will cause public investment to move forward at a faster pace than last year,” she said.
Seven public-private partnership (PPP) projects worth $16.4 billion are being fast-tracked, and the government has shortened the PPP bidding process to nine months from 22, she said. Faster public investment was likely to induce a greater crowding-in effect on the private sector’s investment confidence, Usara added.
Standard Chartered forecasts this year’s public and private investment to increase by 14.9 percent and 5.6 percent, respectively. Low debt-to-equity ratios for most listed Thai companies provide them with capital and leeway to increase their investments. Pent-up investment applications for Board of Investment privileges worth $51 billion since 2014 will steadily translate into real investment, she said.
Merchandise exports are projected to expand by 3 percent in value in U.S. dollars this year, while imports would rise by 8 percent. Headline inflation should rise to 0.9 percent by year-end because of a rise in oil prices.
Thailand’s economy is still heavily dependent on exports, and the Ministry of Commerce remained optimistic that exports would achieve positive growth by the end of 2016 despite continued contractions so far this year.
“The ministry will retain its 5 percent export-growth goal as a working target,” said Somkiat Triratpan, director of the ministry’s Policies and Trade Strategies Bureau. “Exports could rebound to positive growth at any time as oil prices recover and the economies in some markets stabilize, mainly in the United States and China.” Somkiat said that if the value of exports in the second half of the year is $19 billion to $20 billion a month, the 5 percent growth target could still be achieved. But if export value is about $18 billion to $19 billion, the growth figure will be only 2.5 percent.