First quarter growth set for four percent
In a recent announcement, deputy prime minister MR Pridiyathorn Devakula is quoted as suggesting the Thai economy could grow by as much as four percent in the first quarter of this year, largely on the back of increased private investment and the falling price of oil.
As the deputy prime minister noted, domestic consumption and private investment are the major contributors to Gross Domestic Product (GDP) and claimed growth had probably expanded by around two percent in the October to December 2014 quarter. If that figure is correct it will mean overall GDP in Thailand for 2014 would be just on one percent, the lowest level since 2011 when widespread flooding of the central plains and parts of Bangkok slashed GDP to a pitiful 0.1 percent.
One of the reasons for the deputy prime minister’s confidence revolves around the expectation that 1,500 of 3,800 plants that won operating licences late in 2014 are expected to start up within the first quarter of this year. Some 1,608 plants began operations in the last quarter of 2014, thereby significantly boosting the GDP bottom line.
MR Pridiyathorn is a little disappointed at the level of disbursement of the government’s investment budget, saying only 41 billion baht or nine percent of the overall investment budget of 459 billion baht, had been allocated since the 1 October start of the 2015 fiscal year.
The deputy prime minister was happier with the level of allocations of the general budget, saying 726 billion baht had been drawn down in the final quarter out of the over 2.575 trillion baht allocated for expenditure.
Another major factor expected to drive GDP growth in this first quarter is the disbursement of the 80 billion baht construction contracts for infrastructure budget, 66 percent of which is expected to have been allocated during the first quarter.
In order to sustain growth, MR Pridiyathorn said the government would lend its support to new industries that utilize natural resources such as rubber, as well as raw materials for fertilizer.
The government believes Thailand is capable of becoming one of the largest sources of raw material for producing fertilizer since there is around 400 billion tonnes of potash reserves. The government is aiming at approving three potash mines during 2015.
Away from natural resource exploitation, the deputy prime minister said plans are afoot to push Thailand as a preferred headquarters for multi-national companies. There is legislation pending which offers tax exemption on profits, repatriation of dividends and capital gains of international companies who establish regional headquarters in Thailand.