Thailand
Thailand: BoT optimistic 4% growth obtainable
The Bank of Thailand has painted a rosy picture of the country’s economy, saying it is quite possible for fourth-quarter growth to exceed the 4.3% registered in the third quarter, adding full-year growth of 4% is obtainable if exports continue to rise at a double-digit pace.
“It is not hard for the economy to grow at least 4.3% in the fourth quarter, given the low base effect from the same period last year,” said Don Nakornthab, senior director at the central bank’s economic and policy department.
Low-base economic growth in the fourth quarter last year resulted from subdued economic activities, as the country mourned the passing of the late King. The impact of the government’s curbs on illegal tour operations also played a part.
“If we see double-digit growth in merchandise exports, the economy might grow as high as 4% this year,” said Mr Don.
The Thai economy grew 3.8% for the nine months to September, while on a balance-of-payments basis, merchandise exports grew 9.5% during the January-to-October period.
Mr Don said economic growth of 4.6-4.7% in the fourth quarter is required to reach full-year growth of 4%.
“It is possible we will see 4% growth this year as most economic indicators have been positive so far and the government is also injecting money into the economy,” he said.
The Bank of Thailand forecast 3.8% growth for both this year and next. The central bank is slated to revise the outlook again at the next Monetary Policy Committee meeting on Dec 20.
The Fiscal Policy Office recently said Thailand’s economic growth is likely to come close to 4% this year after robust momentum continued in October.
The economy continued to expand that month, supported by merchandise exports, tourism and government spending, said Mr Don.
On a balance-of-payments basis, merchandise exports grew across destinations and categories, amounting to US$20 billion in October, up 13.4% year-on-year. Without gold exports, the value was $19.9 billion, up 14.1%.
Tourist arrivals tallied 2.7 million in October, up 20.9% year-on-year and registering the highest growth this year. That surge was attributed to growth in tourists from almost all nationalities.
Mr Don said manufacturing growth was lacklustre in October because of temporary factors, including the high rate of integrated circuit and semiconductor production last year, the effects of the new excise tax on cigarettes and the large number of public holidays.
In October, the Manufacturing Production Index fell 0.1% year-on-year, down from 4.6% growth recorded in September.
“Bu we expect manufacturing production to rebound, on the back of higher imports of raw materials and intermediate [goods] in October,” he said.
Private consumption also slowed in October, as seen by a 1.4% increase in Private Consumption Indicators, down from 2.9% in September, while spending on durable goods remained strong.
Mr Don said fundamental factors supporting purchasing power were not sufficiently strong as nominal farm income contracted 4% in October, mainly from lower agricultural prices and lower rice production because of flooding in the Northeast.
State spending remained an important growth engine in October as the government’s current and capital expenditures grew 3% and 15.1%, respectively, excluding funds transferred to local administrations.
Headline inflation was 0.86% in October, while core inflation was up marginally to 0.58% from 0.53%, according to central bank data. Separately, despite its stable value in October, the baht has appreciated somewhat in November, he said.
“But the Bank of Thailand isn’t standing idly by, as it has been managing the baht’s value periodically, like when it appreciates too fast, to help Thai exporters adjust to the volatility,” said Mr Don.
Year-to-date, the baht has appreciated 9.9%, ranking as the second-biggest gainer in Asia following the Korean won, which strengthened 11.8% in the same period.
Since the end of June, the baht has been the third-strongest currency with 4% appreciation, after the Korean won (5.3%) and Malaysian ringgit (5%).
Source: https://www.bangkokpost.com/business/finance/1369939/bot-optimistic-4-growth-obtainable