Thailand
Thailand: Committee cautions lower growth in H2
Thailand’s economic growth in the second half is anticipated to expand at a slower pace than the first half because of ebbing exports and tourism coupled with higher oil prices and the strengthening baht, say business leaders.
In addition to last year’s high export base, escalating tensions in the Sino-US trade row, with tit-for-tat tariffs worth a combined US$260 billion (8.4 trillion baht), will have direct and indirect impacts on trade and investment in Thailand, said the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB).
This trade dispute will have an adverse effect on Thailand’s economic growth outlook in 2019, said Kalin Sarasin, chairman of the Thai Chamber of Commerce.
An initial estimation is the Sino-US trade row would reduce Thai exports, shaving off 0.6-0.8% of GDP in 2019, said Mr Kalin.
Fewer Chinese tourist arrivals in August was a result of China’s domestic economic problems, said the JSCCIB.
In the first eight months this year, Thailand drew 25.9 million visitors, up 9.9% year-on-year, with Chinese tourists accounting for 7.73 million.
Although last year’s high base of tourist arrivals affects this year’s growth, foreign tourists are expected to spend more during the remaining months as the Revenue Department has opened three downtown Bangkok outlets for value-added tax refunds for departing tourists, said Mr Kalin.
Higher oil prices and concerns about the US sanction against Iran on crude are keeping a lid on higher growth prospects in the second half, he said. These factors could affect domestic oil prices and government policies to manage oil prices.
Further monitoring is needed on how farm production will be affected by floods occurring in provincial areas, said Mr Kalin.
“We believe Thailand’s economy is strong enough to deal with effects from external factors,” he said.
The JSCCIB increased the lower band of its GDP growth target to 4.4-4.8% from 4.3-4.8%, along with raising the export growth target to 8-10% from 7-10%.
“The committee believes this year’s GDP growth will not be lower than 4.4% as momentum is supported by domestic consumption, private investment recovery, and government budget disbursement, which is close to the target,” said Mr Kalin.
Based on the forecast of the National Economic and Social Development Board (NESDB) of 4.5% economic growth this year, growth in the second half should be 4.2% after the 4.8% showing in the first half, said the Bank of Thailand.
The NESDB in August reported economic growth of 4.6% year-on-year for the three months to June and 4.8% year-on-year for the first half.
The Asian Development Bank recently raised Thailand’s economic growth forecast to 4.5% this year and 4.3% in 2019 after robust growth of 4.8% in the first half.
Source: https://www.bangkokpost.com/business/news/1550886/committee-cautions-lower-growth-in-h2