NESDB forecasts improved growth for 2016
The National Economic and Social Development Board (NESDB) recently released a set of figures covering the main planks of the Thai economy which showed that 2016 is likely to be far better than we have seen over the last two years in particular.
Part of the reason for this economic confidence is the release of large government funds designed to stimulate improvement in the overall infrastructure of Thailand as well as encourage investment.
The NESDB has raised the forecast GDP growth to 2.9 percent for this year, which is 0.2 percent above the low end it had predicted in August, but still well below the optimistic 3.2 percent it had aimed for at the top end of its range. Even so, this year will be a lot better than 2014, with GDP that year just growing by 0.9 percent.
Part of the reason for the upward adjustment comes from better than expected tourism numbers (possibly passing the 30 million mark by the end of the year) as well as the government’s stimulus packages.
On the downside, the NESDB says export volumes will have contracted by a substantial five percent, albeit the third quarter showing an improvement over the second quarter.
Private investment will be down by around 1.3 percent for 2015, which is poor, but still a better result than 2014, which saw a drop of two percent overall. To counter-balance the poor private figures, public investment will be up a whopping 22.6 percent for 2015, evidence the government really had been at pains to try and keep the economy as well oiled as possible.
As far as the surplus in the current account is concerned, that shows a major jump, from 3.8 percent at the end of 2014 to 6.3 percent for this year.
On the positive side for 2016, the NESDB said the depreciation of the baht will help improve export values and enhance revenue and liquidity for exporters. Low oil prices will help enhance the purchasing power of consumers and businesses. It will also allow room for what the NESDB terms accommodative monetary policy.
The negatives are the continued slowdown in the Chinese economy and the depreciation of the yuan and other major currencies of Thailand’s trading partners as well as the drought across the northeast and north.
After weighing all the various factors, the NESDB is predicting a GDP growth rate for 2016 of between three and four percent. It also expects inflation to run at between one and two percent, thereby moving out of the potentially economically dangerous deflation stage it is currently in. it also expects private investment will return to positive territory for the first time in three years.