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BOT sees 2.5% growth a possibility

Apr 10. 2015
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By Erich Parpart

The Nation

Thailand's gross domestic product (GDP) would still be able to expand, mathematically, by at least 2.5 per cent this year even if there is no quarter-to-quarter economic expansion from now on, a Bank of Thailand director said.

Don Nakornthab, BOT’s director of macroeconomic policy, said the Kingdom’s GDP has expanded by 0.7 per cent in 2014 and the central bank’s latest forecast expects the economy to expand by 3.8 per cent in 2015, but only if the government is able to invest on mega-projects and other projects as planned.

"Government spending on investment should improve, as they have signed a record number of commitments previously but if there is nothing tangible by the second quarter, there is no way the economy would be able to expand by 3.8 per cent. Nevertheless, if there is no quarter-to-quarter GDP expansion at all from now on until the end of the year, the economy would still be able to mathematically expand by 2.5 per cent when compared to last year," Don said.

Meanwhile, he revealed that exports of merchandise must achieve at least Bt19.2 billion per month from now on if the sector is to be able to expand by 0.8 per cent as predicted by the BOT, but the vice chairman of the Thai National Shippers Council (TNSC) Vallop Vitanakorn does not believe that this is possible based on the sector’s current performance and the global economic picture.

"There is no way this can happen. The current export value in the first two months averages around US$17 billion and it would be able to expand, at best, to US$18 billion on average this year. This means that there is a big chance that the export sector would not grow at all, as last year’s average is around US$19 billion. At best, this year would see flat growth," Vallop stressed.

Exports in 2014 contracted by 0.3 per cent year on year to US$224.792 billion at the end of last year while exports in the first two months of 2015 shrank further by 4.82 per cent to US$34.48 billion from the same period last year.

However, Don said that the performance of Thailand’s export sector was not that bad when compared to its neighbours, as the Kingdom’s 6-per-cent contraction since the last month of 2014 was better than the contractions of 10 and more than 10 per cent for Singapore and Malaysia (excluding export of energy products) respectively in the same period.

Tim Leelahaphan, an economist and assistant vice president of the research department at Maybank Kim Eng Securities, said he agreed with the central bank that the government would have rush its investments but added that public investment on mega-projects would not be tangible until the second half of this year.

He explained that the projects most likely to begin construction by the second half of this year are the Thai-China railway in the North. Construction could begin as early as September while public-private partnership projects such as the Pink, Yellow and Blue mass-transit projects in Bangkok are the most promising along with the construction phase of the national broadband, which could begin around the end of year.

"These public investments should begin this year given that there is no political turmoil going forward," he said.

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