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Somkid leaves nothing to chance in drive to secure 4% GDP growth

Nov 21. 2018
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DEPUTY Prime Minister Somkid Jatusripitak is pulling out all stops to guide the economy to close out the year with growth of more than 4 per cent, prodding state enterprises to spend 95 per cent of their Bt445-billion investment budget.

Somkid is also pushing for growth in exports to top 7 per cent for the last quarter of this year. His redoubled efforts to spur the economy come after the economy managed to expand just 3.3 per cent in the third quarter.

For the final three months, growth in gross domestic product (GDP) is targeted at 3.5 per cent.

Somkid, after chairing a meeting aimed at speeding up the disbursement of state enterprises’ investment budgets, said that the enterprises have been asked to accelerate their investment as targeted in the last quarter of this year in order to help drive the country's economic growth above 4 per cent for the whole year.

The third quarter slowdown to 3.3 per cent has seen the economic chief look at ways to ensure growth targets are met.

The economy grew 4.9 per cent year on year in the first quarter of this year and 4.6 per cent in the second quarter.

"The GDP growth of 3.3 per cent in the third quarter came from a contraction of September's exports by over 5 per cent,” Somkid said.

“But investment and consumption remain good. That quarter's GDP has been affected as exports contribute about 70 per cent to GDP. We insist that confidence remains.”

For the last quarter of this year, Somkid said programmes for all sectors that play a large role in stimulating the economy will be expedited and state enterprises have been urged to spend without delay.

For October, exports increased 8.7 per cent year on -year, driven mainly by an increase of over 10 per cent in shipments to Japan. 

"If Thai export grows 7 per cent and GDP growth rises 3.5 per cent in the fourth quarter, GDP will increase over 4 per cent for the whole of this year," Somkid said.

Prapas Kong-ied, director-general of the State Enterprise Policy Office (Sepo), said that as a means of helping to drive this year's economic expansion, 18 state enterprises with large investment budgets have been asked to accelerate disbursement of the funds as targeted, particularly for the fourth quarter of this year.

Prapas attended the meeting chaired by Somkid.

In 2018, some 45 state enterprises regulated by Sepo have a combined investment budget of Bt445 billion. As of October, about 339 billion or 85 per cent of the accumulative investment budget disbursement plans had been disbursed.

Budget for state units 

For next year, the combined investment budget has been set at about Bt391 billion, covering enterprises with large investment projects such as State Railway of Thailand, the Mass Rapid Transit Authority of Thailand, the Electricity Generating Authority of Thailand and Provincial Electricity Authority, and PTT Plc.

State enterprises that report financial results in both the calendar and fiscal years are required to consider further front-loading of budget disbursements and to accelerate their investment budget at no less than 95 per cent.

Phacharaphot Nuntramas, senior director of global business development and strategy at Krungthai Bank, said that economic growth is forecast at no more than 4.5 per cent this year after the third quarter’s relatively weak performance, in comparison with the first half. This was due partly to contraction in the agricultural sector as a result of the boost to output from favourable weather in the first six months of year.

Among the positives are that public investment and manufacturing are continuing to expand and exports grew 8.7 per cent in October.

Thailand will likely start to realise impacts from the US-China trade war from the fourth quarter of this year to the first half of next year, Phacharaphot said.

China's economic slowdown and a depreciation in the yuan should be kept on watch, which could lead to less Thai shipments to China. In October, Thai shipments to China rose only 3 per cent, lower than those to other Asian destinations. The country’s shipments to Japan and Asean increased 18.7 per cent and 21.8 per cent, respectively.

Phacharaphot said that the Bank of Thailand's Monetary Policy Committee (MPC) is expected to decide to raise the policy rate by 25 basis points in its December meeting after Thai economic figures have not indicated a slowdown.

Mathee Supapongse, deputy governor of the Bank of Thailand, yesterday said that the BOT might revise downward its GDP growth forecast from a current projection of 4.4 per cent.

“GDP growth above 4 per cent would not have any effect on direction of interest rate policy,” he said in response to a question whether slower economic growth would make BOT refrain from a rate hike.

His statement apparently signalled that the central bank might raise the policy rate in the next meeting of MPC next month.


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