BANGKOK: Thailand’s Finance Ministry kept its 2016 growth outlook intact in new economic forecasts announced on Friday, and also said it expects exports to fall less sharply than initially projected. Southeast Asia’s second-largest economy has seen its exports decline in the past three years, and growth has also been dampened by weak consumption and high household debts. Since taking power in May 2014, the military government has struggled to keep growth on an even track.
The Finance Ministry said in its latest report the economy was likely to grow 3.3 percent this year, with a forecast range of 3.0 to 3.5 percent due to strong government spending and tourism, unchanged from its previous forecast in July. Next year, the economy is projected to expand 3.4 percent with a forecast range of 2.9 to 3.9 percent, Krisada Chinavicharana, head of the ministry’s Fiscal Policy Office, told reporters. Growth was 2.8 percent last year.
The ministry now expects exports, a key driver of the economy, to contract only 0.5 percent this year, better than the 1.9 percent decline it predicted three months ago, due to surprisingly strong shipments in August and September.
In 2017, exports are expected to increase 1.8 percent helped by improved global growth. Despite the improved export outlook, the ministry maintained its economic growth forecast this year because government spending in the 2016 fiscal year ending September 30, was lower than expected, Mr. Krisada said. The trade-dependent economy likely grew 3.3 to 3.5 percent in the third quarter from a year earlier, he said. In April-June, the economy grew 0.8 percent from the previous three months and 3.5 percent on the year.
Thailand will officially release third-quarter gross domestic product (GDP) data on November 21. King Bhumibol Adulyadej, widely venerated, died on October 13 at age 88 after a long illness. The military government has declared a year-long period of mourning, urging people to curtail festivities during the first 30 days after his death. Mr. Krisada said consumption, however, was expected to increase steadily in the final quarter of this year.
“In 2017, the economy will be driven by higher government spending, particularly in new infrastructure projects that will also help attract private investment,” he said. The Bank of Thailand has forecast GDP growth of 3.2 percent this year and again in 2017. The central bank has left its policy interest rate unchanged at 1.5 percent since April 2015. The Finance Ministry has predicted the rate will stay unchanged throughout 2017.
