Four percent growth in 2015 ‘possible’
According to the Kasikorn Research Center, an arm of the Kasikorn Bank, a possible rebound in exports, rising domestic consumption, and public investment could see the Thai economy grow by as much as four percent in 2015.
Kasikorn accepts that Thailand’s economy will only see a growth of 1.6 percent for this year amid falling exports and poor tourism numbers. This is down from the 2.3 percent projection which was made in June this year. At that time it was not expected that tourist numbers would fall as dramatically as they have; that figure currently being down by around 5.8 percent.
While consumer spending is expected to recover by about three percent over the course of the second half of this year, which is an improvement on the first half contraction of 1.4 percent, this is still set to be tempered by the high level of household debt, currently the worst in Asia. Kasikorn’s prediction is slightly above the central bank’s 1.5 percent forecast.
The military coup and subsequent military-appointed government has had the desired effect of restoring a sense of stability which can be seen in the generally improving economic numbers. The government has embarked on a series of economic stimulus packages in the hope of restoring overall consumer confidence. Although these have had the effect of adding around one percentage point to the 2014 bottom line, the real multiplier effect is more likely to take place in 2015.
Part of the expected growth will come from a rebound in tourist numbers which had dwindled to 15.7 million, although this recovery is not a given considering the appeal of other destinations in the region.
Other challenges to the projected forecast figures include the overall sluggish global economic recovery, the threat of the Ebola pandemic, the increased unrest in the Middle East, and a shift in the US Federal Reserve’s monetary policy.
Nonetheless, according to an expert from the Bank of Thailand, household spending is expected to recover as incomes improve and debts are gradually reduced. A central bank spokesperson said clearer public policies had led to greater private sector confidence, giving rise to an improvement in the employment outlook as well as non-farm incomes.
Nonetheless it could take some time for household spending to normalize since the debt ratio remains so high, running at 83 percent, or the equivalent of 10 trillion baht into the second quarter. Low farm prices may also make some households wary of spending on durable goods.
Basically, for the four percent growth to be achieved in 2015, the tourist market must jump substantially and exports must also see significant growth.