ADB raises growth forecast for Thailand

Confidence can be contagious, and the Asian Development Bank has joined other institutions expressing an optimistic view of Thailand’s economy by raising its growth forecast for the Kingdom last week to 4.5 percent for 2018 up from an earlier prediction of 4.2 percent.

The forecast by the Asian Development Bank (ADB) is slightly higher than the most recent estimate issued by the Bank of Thailand, which said growth this year should reach 4.4 percent.

“We see high consumer confidence supporting domestic demand and the government’s welfare program for low-income earners helping prop up domestic demand,” said ADB Senior Economist Thiam Hee Ng.

Business confidence is also high. Over 81 percent of CEOs polled said their companies were very likely to make significant capital investments during the next 12 months, according to the 2018 Business Barometer: Thailand CEO Survey conducted by Oxford Business Group and released last week.

The executives also gave high marks on governance with 76 percent of CEOs surveyed saying transparency was high or very high in Thailand relative to the region.

One of the main concerns of the executives was the potential fallout from trade tensions between the United States and China.

“Stakeholders in Thailand have expressed concern that Chinese exports of goods and commodities once destined for the U.S. could flood the Thai market, depressing prices and squeezing local producers,’’ said Patrick Cooke, Oxford Business Group’s regional editor.

Many local and international economists have also cautioned that growth would slow during the second half of 2018 as exports have already peaked. Exports are the most potent driver of the Thai economy, and traditionally they surge to their highest annual point during the month of September.

The Bank of Thailand said last week that it believes exports will grow by 9 percent for the entire year, but they will probably expand by just 7 percent in the remaining three months of 2018.

The ADB had a more bullish view of Thai exports, forecasting that they will grow by 10 percent this year. The bank said that while manufactured goods would be the best performers, agricultural products should also do well, which is good news for Thai farmers and the country’s agro-industrial conglomerates.

Another positive factor for the Thai economy, the bank said, was that inflation remains low at 1.3 percent.