Thailand: Govt spending driving growth as investment stalls

Government spending continued to be the growth driver of the Thai economy as private investment remained unchanged and tourism contracted in February, the Bank of Thailand said on Friday.

Government spending expanded at a slower pace, but continued to be the driver of the economy. Excluding transfers, spending rose due to salary increases for government officials, and on transport projects and irrigation projects, it said.

Private investment remained unchanged from January while still concentrating on energy, service and export-related businesses. Investment outlook for other sectors remained weak in the short term.

The tourism sector fell by 3.2% as the number of Chinese and Malaysian tourists decreased after the Chinese New Year. Malaysian tourists, who usually travel to Thailand by car, also declined due to higher oil prices and the depreciation of the ringgit.

The value of merchandise exports rose in most categories, with growth of 0.7% compared to the same period last year. Excluding gold, the expansion was 8.4% on the back of both greater quantity and prices.

Exports of rubber and rubber products benefited from increasing prices resulting from higher demand from Chinese importers looking to build up the existing low-level inventory.

Exports of electronics and optical appliances expanded. Exports of integrated circuits to China, Hong Kong, Japan and South Korea rose to meet demand for production of smart phones and devices that support the “internet of things”.

Exports also increased of petroleum-related products, airconditioners to neighbouring countries, and electrical appliances and solar panels due to the relocation of production bases from China to Thailand to avoid anti-dumping measures by the United States.

The value of merchandise imports grew by 13.4%. Excluding gold, the value expanded by 11.4%.

Headline inflation slightly slowed to 1.44% from 1.55% in January as excise tax on tobacco increased last year and prices of fresh food decreased as supply improved.

The seasonally adjusted unemployment rate slightly edged up to 1.1% from 1.0% in January as more workers returned to the labour force to look for jobs, the BoT said.

Source: http://www.bangkokpost.com/business/news/1224708/govt-spending-driving-growth-as-investment-stalls