Bleak export prospects to hit growth, Sommai warns

Exports, which account for over 70 per cent of Thailand's GDP, are projected to contract 1.7 per cent, Sommai said, adding that as a result this year's economic growth rate would likely drop to below three per cent.
Sommai said: “Let me tell you the truth - we will not be able to expand by more than 3 per cent this year since the second half will likely be worse than the first half,” he said at an investment seminar held by Nation Radio 102 FM yesterday.
In the first five months of this year, Thai exports dropped 4.2 per cent year-on-year with May shipments down 5 per cent compared to the same period last year, largely due to the global demand weakness. This has raised the possibility that the 2015 overall export growth will be in negative territory.
Sommai said the export slump's effects on the Thai economy are greater than the government’s economic stimulus efforts - with GDP growth in the first half estimated to be around 3 per cent while the second half's growth is likely to be around 2.6-2.8 per cent.
Earlier, Deputy Prime Minister MR Pridiyathorn Devakula said the economy should be able to grow by more than 3 percent due to an increase in private sector and consumer confidence and government spending in mega-infrastructure projects.
According to Sommai, government spending will expand by 15.3 per cent in the second of the year but it only accounts for 22-23 per cent of GDP - compared to the export sector's 74-75 per cent share of GDP.
On tourism, he said, arrivals have increased but spending per tourist had dropped.
“More Chinese tourists, yes, but the amount that they are spending per day is still lower compared to European tourists, while the economic slowdown in Russia is also affecting the tourism industry,” he explained.
The Finance Minister said that the ongoing drought and the high level of household debt of around than 85 per cent to the GDP were also dragging down on domestic consumption.
On a positive note, Sommai said government spending plans towards 2016 and following years now included at least two more mass transit train lines in Bangkok and construction of three additional motorways, a high-speed train in the Northeast, and highways for East-West economic corridors, phase two of Suvarnabhumi airport, investments in water management projects and digital economy.
Bank of Thailand's spokesman Chirathep Senivongs Na Ayudhya said the ongoing drought's impact on the Thai economy should be minimal as the industrial sector was not significantly affected due to their alternative groundwater reserves - but the farm sector's purchasing power would be seriously affected, resulting in a drop in domestic consumption.