Economy back on track

  • Rising overseas demand for goods and services pushed Thailand’s GDP to a five-year high in 2017, with business-friendly fiscal policies and planned spending on infrastructure expected to support further expansion in 2018.
  • The economy improved over the course of 2017, recording y/y growth of 3.3% in 1Q17, 3.8% in 2Q17 and 4.3% between Jul-Sep 17, the largest quarterly jump since 2013, according to the National Economic and Social Development Board (NESDB). It attributed the improvement to a rise in exports, consumption and private investment, coupled with improved returns from agriculture and manufacturing.
  • Full-year export growth has been estimated at 8.6% in 2017, following 0.1% growth in 2016 and three consecutive years of contraction before that.
  • Interest rates and inflation steady: Despite the faster pace of growth, the Bank of Thailand left its benchmark one-day repurchase rate at 1.5% throughout 2017. The rate has remained at 25 basis points above its all-time low since Apr 15. In notes released following a review in late Nov 17, the central bank’s Monetary Policy Committee appeared to rule out any short-term increases, as well as any further reductions in the rate.
  • Infrastructure plans drive new growth: The government’s Thailand 4.0 programme, which aims to shift the economic focus away from production and towards services and innovation, is set to be a major driver of new growth in 2018.
  • Thailand 4.0 is also expected to improve the country’s regional competitiveness, with the aim of deterring businesses from relocating to more labour-intensive manufacturing bases like Vietnam and Cambodia. Competitiveness will be enhanced by the acceleration of transport projects in 2018.
  • Household debt a concern: Domestic consumption is expected to rise in 2018, helped by tax breaks that were offered on year-end shopping after the year-long mourning period for late King Bhumibol ended on 27 Oct 17. However, high levels of household debt could put a brake on consumer expenditure.

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