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Thailand – FPO: Export drop of 0.9%-plus spells doom for 3% GDP growth
This year’s export contraction must not exceed 0.9% if Thailand’s GDP growth is to reach 3%, says the Finance Ministry’s Fiscal Policy Office (FPO).
Thai shipments saw a 2.2% year-on-year contraction during the first eight months, while August exports tumbled 4% year-on-year, said FPO deputy director-general Wuttipong Jittungsakul.
With the ongoing export doldrums, a continued export contraction in the remaining months will hurt the country’s annual GDP growth, Mr Wuttipong said.
The hope is that export figures in the remaining months will fare better than the disappointing tallies seen earlier this year, he said.
The Sino-US trade dispute surfaced late last year, causing Thai exports to slow down as a result. The low-base effect could help shore up the value of Thai shipments in the final quarter of 2019.
Thailand’s economy grew by 4.1% year-on-year in 2018, with annual export growth of 7.7%, according to the National Economic and Social Development Council.
In August, several economic indicators pointed towards a slowdown, according to an FPO report.
Investment in machinery, represented by imports of capital goods, fell by 9.4% year-on-year, while the sales volume of commercial vehicles shrank 9.2% year-on-year.
The construction material price index declined 2.3% year-on-year, partly due to a delay in investment amid investors’ concerns over the economic growth trajectory, Mr Wuttipong said.
Tourism, however, expanded at a solid 7.4% year-on-year. International tourist arrivals totalled 3.47 million, with tourism revenue amounting to 169 billion baht.
The recent stimulus package worth 300 billion baht is designed to rev up growth domestically, said Finance Minister Uttama Savanayana.
Thailand’s annual economic growth hinges on several factors, including exports, Mr Uttama said, noting that slower global growth has taken a toll on Thai shipments.
“We have to help circulate [spending] in the domestic economy amid [a slowdown] in global economic growth,” he said. “The final number [for Thailand’s annual GDP growth this year] will have to wait for assessment by different organisations.”
On Wednesday, the Bank of Thailand’s Monetary Policy Committee made a third cut to its projection for Thailand’s GDP growth this year.
The first prediction was made late last year at 4.2%, which has subsequently been trimmed to 3.8%, 3.3% and now 2.8%.
The multiple downgrades are attributed to the difficulty in forecasting the US-China trade situation.
Source: https://www.bangkokpost.com/business/1759229/fpo-export-drop-of-0-9-plus-spells-doom-for-3-gdp-growth