Thailand: Questions remain over outlook

  • Although the mourning period has come to an end, there are still concerns and uncertainties over economic conditions in 4Q17, with many analysts asking if 2016’s subdued growth after the late King’s passing on 13 Oct 17 will repeat itself.
  • A pickup in private consumption is expected to gather steam in the final two months, but the recovery is not expected at a fast clip as some fundamental factors remain weak, said Amonthep Chawla, head of research at CIMB Thai Bank.
  • The holiday season should help spur consumption to a certain degree, while a recent pickup in private investment should help boost employment and subsequently support consumer income and purchasing power in the last two months, he said.
  • Despite these encouraging factors, a decline in income indicators for both the farm and non-farm sectors could dent purchasing power and consumption sentiment for the remaining period of 2017, said Mr Amonthep.
  • Also, the economic recovery remains concentrated in certain sectors such as exports and tourism, which do not have a spillover effect on private consumption.
  • Charl Kengchon, managing director of Kasikorn Research Center, is more optimistic, saying that business activities and marketing campaigns are expected to pick up at a brisk pace in Nov-Dec 17, coinciding with the festive season.
  • Normally, the final quarter is associated with shopping and tourism, while an acceleration in the government’s budget disbursement during 1QFY17, along with strong export growth, will be other factors propelling the economic engine, said Mr Charl.
  • But Mr Charl said the flood situation needs to be monitored as the water level at several dams nationwide continues rising
  • Although many businesses and tourist attractions were asked to tone down their activities over the past month for the late King’s royal cremation ceremony, the Tourism Ministry expects foreign visitors to return to the country during Nov-Dc 17, while locals will travel across the country to celebrate the beginning of the New Year.
  • The ministry is confident that the country will achieve total tourism income of THB2.7tr as projected for 2017.
  • But there could be some external risks, such as geopolitical tensions between the US and North Korea, which should be closely monitored, he said, adding that no internal risk derailing Thailand’s economic recovery is expected, as the year-end celebrations should rev up consumer spending.
  • For the property sector, many developers are adopting a wait-and-see approach to assess their investments. Project postponement is a risk-off option that property developers can undertake amid mixed views on the economic outlook.

External Link :