BANGKOK: Thailand’s Finance Ministry on Monday raised its economic growth forecast for this year to 3.8% from 3.6%, and upgraded its estimate for export gains, a senior official said. Exports, a key driver of Thai growth, should increase 8.5% this year, compared with the 4.7% projected in July, Suwit Rojanavanich, director general of the ministry’s fiscal policy office, told a news conference, Reuters reported. Southeast Asia’s second-largest economy this year will be mainly driven by stronger exports and tourism amid improved private investment, he said. So far, a strong baht has not appeared to dent Thailand’s export competitiveness, but the government is worried that trade and economic growth could be dented in 2018 if the baht continues to climb. The baht has appreciated by 7.7% against the US dollar this year, the biggest gain among Asian currencies. Exports recovered in 2017 after a modest 0.5% rise in 2016 following three years of contraction, customs data showed. For 2018, the ministry predicts economic growth of 3.8%, mainly driven by government spending. It predicts exports will rise 5.7%. Last month, the Bank of Thailand raised its 2017 economic growth forecast to 3.8% from 3.5%. It also projects growth of 3.8% for 2018.
Thailand’s growth has picked up but still lags regional peers. Private investment has remained weak for years while high household debt has crimped consumption. In 2016, the economy expanded 3.2%. The finance ministry predicts the central bank will keep its policy interest rate at 1.50%, where it has been since April 2015, throughout 2018. Meanwhile, Thailand’s headline inflation is expected to be little changed in October and still below the central bank’s target range, while September factory output growth slowed, a Reuters poll showed, giving policymakers room to keep monetary policy loose. The median forecast of 13 economists was for the headline consumer price index in October to rise 0.82% from a year earlier. In September, it was up 0.86%.
