Tourism helps lead a solid GDP growth
Gross Domestic Product (GDP) growth in Thailand reached 3.2 percent for the first quarter of 2016, a high it has not seen for three years according to the National Economic and Social Development Board (NESDB).
According to the NESDB the two key reasons for this surge in GDP is the rapid improvement in the tourism sector and the deployment of the government’s stimulus measures which began last September.
The NESDB said the government has launched 10 specific stimulus packages with a 645 billion budget allocation, with 518 billion baht earmarked for what it termed a variety of ‘soft’ loans while the remainder was part of government spending. Around 141 billion baht was spent in the first quarter this year.
The NESDB believes a further 116 billion baht will be sufficient to maintain the momentum gained in the first quarter.
Tourism is the one sector which has well and truly kept Thailand’s economy pumping along in the first quarter, rising a significant 15.5 percent to see nine million foreign arrivals.
The NESDB believes tourism will generate income of around 1.68 trillion baht in 2016 and this will account for 12 percent of GDP, a jump from 10 percent last year.
Tourist arrival numbers, originally projected to reach 32.5 million, have been scaled upwards, to 33 million for this year.
On the downside, the NESDB has revised down its export forecast due to the weakening of large economies, especially China. While previously touting a 1.2 percent growth in exports, it now says there is likely to be a 1.7 percent contraction.
The severe drought has also heavily impacted farm incomes, which, in turn, has led domestic consumption in the agricultural sector to contract by 1.5 percent in the first quarter.
The Board of Investment (BoI) said investor requests for investment privileges had risen by 212 percent to 109 billion baht in the first quarter compared to the same period in 2015.
The Fiscal Policy Office (FPO) believes Thailand’s economy has already passed its toughest period, in 2014, when growth was a paltry 0.8 percent. The FPO differs in its estimates for export contraction, believing exports will fall by 0.7 percent rather than the 1.7 percent predicted by the NESDB.
Much of the economic growth hope is centred around the 1.7 trillion baht’s worth of government big-ticket infrastructure projects, with the hope that these will have a knock-on effect across the country in terms of stimulating economic growth.
The FPO had cut its expected GDP growth this year from 3.7 to 3.3 percent due to the continuing problems in the export market.