BANGKOK: Thailand’s record tourist arrivals and public works spending are expected to offset weak domestic demand and global economic drag, keeping Southeast Asia’s second-largest economy on course for 3.1 percent growth this year, the central bank governor told Reuters in an interview. The trade-dependent economy has been hit hard by the deteriorating global economic environment and the slowdown in demand for exports, which the Bank of Thailand (BOT) expects to decline for the fourth consecutive year in 2016.
Tourism has been one of the few bright spots in the Thai economy, and government spending on big ticket infrastructure should give a jolt to the sluggish economy later in the year, BOT Governor Veerathai Santiprabhob said. “We are on track,” Veerathai told Reuters in an interview on Friday. “We’ll have to monitor the secondary impacts of Brexit. Certain sectors of our economy have been hit by China’s transition. But we expect to see better government disbursement for large projects in the second half of the year.”
The central bank has predicted economic growth of 3.1 percent this year, with exports contracting 2.5 percent. The economy expanded 2.8 percent last year, picking up from 0.8 percent growth in 2014 when political turmoil brought the country to the verge of recession. In the first quarter, the Thai economy grew 0.9 percent on the previous quarter and 3.2 percent on the year.
The military government has talked up plans for big infrastructure projects since seizing power in a May 2014 coup, but has spent little. That should change now big projects have gone to auction, Veerathai said, adding spending would increase again in 2017. Veerathai said while the central bank can ease policy if conditions worsen considerably, there was no immediate need to cut interest rates to stimulate growth as liquidity remains ample.
