Drop in average monthly income could dent economic growth
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The average monthly income of people in the non-agricultural sector dropped for the first time since 2011, maintaining pressure on private consumption and on gross domestic product growth in the next few years, a Kasikornbank seminar heard yesterday.
Speaking at KBank on the economy, rates, and foreign exchange to the bank’s customers, Pornwalee Pilawun, market and economic research specialist, noted that the average monthly income of people in the non-agricultural sector since 2011 had showed a gradual increase in the range of Bt14,500-Bt14,900. However, after January 2015, the income level had dropped to Bt14,000.
This downtrend in the monthly income of people in the non-agricultural sector is a cause for concern because this would impact consumption and consequently limit the possibilities for GDP expansion, she said.
Since 2011, the monthly income of people in the non-agricultural sector had increased from Bt10,000 to Bt14,900.
She said the drop in average monthly income could be attributed to purchase of vehicles under the previous government’s first car scheme and expenses on residences incurred from the 2011 floods.
The reduction in monthly income of these people is also contributing to a higher level of household debt, which is also a drag on consumption, she said.
The household debt to GDP ratio has currently reached 80 per cent.
The average monthly income of people in the agricultural sector has stayed at Bt13,000. However, consumers in the agricultural sector are the hardest hit from the severe drought even if the price of agricultural goods appeared to have bottomed out, said the specialist.
Looking ahead, public spending and tourism hold the key the key to GDP growth.
In the long term, private investment is needed to lift growth and competitiveness because total investment in Thailand was not adequate to enhance growth since last year’s political impasse.
World Bank senior economist for Thailand, Kirida Bhaopichitr, expressed the same view as KBank, saying the country must place importance on competitiveness of the export sector in the next 3-5 years to fuel GDP growth.
The World Bank projects Thai GDP growth this year 3.5 per cent if exports grow 0.5 per cent, otherwise it would only be 3 per cent, she said.
The World Bank might adjust its forecast again in October, she said.
Kirida said on the sidelines of the KBank seminar that the severe drought could bring short-term risk for Thai growth prospects, as income of farmers account for 9 per cent of total GDP.
