BANGKOK: The Thai economy looks poised for modest growth in 2017 as domestic strengths are expected to cushion larger downside risks from external headwinds, the central bank and economists say. The Bank of Thailand’s Monetary Policy Committee (MPC) has maintained its economic growth forecasts of 3.2% for 2016 and 2017, noting that downside risks to the Thai economy largely come from external factors. External risks include potentially weaker-than-expected growth of Thailand’s trade counterparts — China in particular — uncertainties over the soon-to-be US president’s protectionist campaign promises and the recovery pace of Chinese tourist arrivals. The coming general elections in a number of European countries, which could shift their policy directions and wild swings in the financial markets resulting from the divergence of monetary polices for advanced economies, will contribute to greater downside risks in 2017.
The Bank of Thailand has estimated that the government’s harsh measures to curb illegal tour operators will knock off 1.2 million and 2.2 million foreign tourist arrivals, most of them Chinese, to Thailand in 2016 and 2017, respectively. The tourism sector, accounting for 10% of the country’s GDP, has played an important role in driving Thai economic growth over the past several years in light of anaemic exports, private investment and domestic consumption.
