New trading era kicks off

Thailand's real GDP growth 'to rise only marginally'

Thailand's central bank has revised the growth projection for this year from 3.7 per cent to 3.5 per cent.
Thailand's central bank has revised the growth projection for this year from 3.7 per cent to 3.5 per cent.PHOTO: EUROPEAN PRESSPHOTO AGENCY

The establishment of the Asean Economic Community means growth prospects for the new common market of 625 million people have never looked better. Rupali Karekar looks at what 2016 may have in store for five of the biggest economies of the 10-member bloc.

The region's second-largest economy has yet to regain traction more than a year after the military seized power to end political unrest.

Exports and domestic demand remain stubbornly weak and, last week, its central bank added to the gloom by revising downwards the growth projection for this year - from 3.7 per cent to 3.5 per cent.

Economists predict Thailand's real gross domestic product growth will improve only marginally to 3.3 per cent this year, over an estimated 3.2 per cent expansion last year.

"Weak crude oil prices and ongoing government efforts to accelerate public investment will provide a measure of support for the Thai economy, (but) mounting external headwinds will remain a drag," BMI Research's Mr Andrew Wood said.

Uncertainty over a return to civilian rule and succession plans for the ailing king will hit foreign investor confidence this year. Thailand is in deflation, while the baht lost 8.8 per cent against the US dollar, the third-worst performance in Asia.

As Thailand is a member of the Asean Economic Community, its retail market is bound to grow with its continued urbanisation, growth in tourist arrivals and strong domestic buying power. However, as a non-member of the Trans-Pacific Partnership, the country may be hurt as investment and trade divert towards member markets.

But all is not lost. Thailand's Cabinet is set to invest in infrastructure projects this year. That, along with muted inflation pressures, may benefit the transport-related and utility industries, Mr Wood said.

A version of this article appeared in the print edition of The Straits Times on January 06, 2016, with the headline 'Thailand's real GDP growth 'to rise only marginally''. Print Edition | Subscribe