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Thailand: FPO holds GDP growth at 4.5% on consumption uptick
The Fiscal Policy Office (FPO) is maintaining its forecast for the country’s economic growth at 4.5% as private consumption picks up and investment counters sagging global demand.
Private consumption and investment are gaining momentum, in tandem with the falling unemployment rate and higher farm income as crop output rises, said fiscal policy adviser Warotai Kosolpisitkul.
The government’s welfare and subsidy scheme for the poor also bolsters the economy, he said.
The Finance Ministry’s think tank marginally trimmed the average economic growth forecast for 15 trading partners to 3.99% from 4.03% predicted in July.
The FPO also slashed the country’s outbound shipment growth estimate to 8% this year from 9.7% projected three months ago.
Thailand’s exports in September fell 5.2% year-on-year, fetching US$20.7 billion (687 billion baht), after growing 6.7% in August, 8.3% in July, 8.2% in June and 11.4% in May. It was the first dip in 19 months.
For the first nine months of this year, exports still managed an expansion of 8.13% to $189.72 billion, with imports increasing 15.2% to $186.89 billion, yielding a trade surplus of $2.83 billion.
He said stronger than expected economic growth for the six months through June at 4.8% year-on-year is another reason the FPO maintained this year’s economic growth.
The FPO upgraded private consumption outlook to 4.2% this year from 3.8% forecast in July but cut public consumption estimate to 2.6% from 2.9% predicted earlier.
Public investment growth forecast this year was slashed to 5.1% from 7.9% projected three months before, and the axed projection of foreign arrivals this year to 38 million from 39.5 million and tourism income to 2.01 trillion baht from 2.08 trillion.
Private investment growth is predicted to stay at 3.9%.
The average baht value of the US dollar is also kept at 32.25 baht, while the Bank of Thailand’s policy rate is expected to stand pat at 1.5% throughout this year.
The US-China trade dispute and the wild swing in the global financial market are risks that warrant monitoring, he said.
Pornchai Triraveja, another fiscal policy adviser at the FPO, said the trade spat between the world’s top two economies will prompt production base relocation and the countries will seek substitute products from new markets in the long term to avoid the tariffs.
The 64% year-on-year growth in rubber and plastic and the 34% increase in foods exported from Thailand in September indicate foreign manufacturers are using more products from Thailand to replace Chinese products, he said.
Deputy Prime Minister Somkid Jatusripitak recently voiced growing concerns about the sagging Chinese economy, which may affect Thai exports and tourism in the remaining months and next year.
Higher oil prices and interest rates, as well as slowing global prospects, also pose threats to the economy next year, he said.
Source: https://www.bangkokpost.com/business/news/1566810/fpo-holds-gdp-growth-at-4-5-on-consumption-uptick