Fiscal Policy Office positive on economy

The Commerce Ministry expects the December 25-31 year-end shopping tax incentive to raise spending by Bt150 billion over the week.
The FPO, though, expects this measure to inject at least Bt22.5 billion into the economic system, based on the assumption that around 3 million consumers will spend no more than Bt15,000. That would translate into a 0.4-per-cent expansion in domestic consumption or 0.1-per-cent boost in gross domestic product.
“Our estimate is that the 2015 GDP growth will be closer to 3 per cent thanks to this measure,” said Kulaya Tantitemit, director of the FPO’s Macroeconomic Policy Bureau.
She predicted that in 2016, the economy would be supported by fast-tracked public-private partnerships and other transport mega-projects such as the railway double-tracking, motorways, and urban rail as well as the expansion of Suvarnabhumi Airport and the Laem Chabang port and industrial estate.
Expansion of the export sector is also expected be positive next year, though it will be lower than the 2.5 per cent projected earlier, mainly because of a contraction of more than 5.5 per cent in the first 11 months of 2015. The sector will be backed by continuous expansion in border trade, which is expected to grow by 7-8 per cent next year thanks to the newly set-up special economic zones in five border provinces.
The tourism sector is also |expected to remain good next year, though the projected number of visitors will be based on the FPO’s revised economic projects, which will be revealed next month.
Risks for next year, meanwhile, are slower-than-expected global economic recovery, a slowdown in China and its effect on other Asian economies, continued fluctuation in money markets from the divergence of monetary policy in major economies, and the prospect |of drought and the effects of dropping oil prices on agricultural productivity and farmers’ purchasing power.
Meanwhile, statistics show that domestic consumption has continued to improve, as the collection of value-added tax based on domestic consumption rose by 3.5 per cent year on year in November, and 4 per cent higher than in October after seasonal adjustment.
The sale of motorcycles has also risen by 6.9 per cent year on year, 6.6 per cent more than in October, while consumer confidence has been on the rise for two months in a row to 63.4 point now thanks to expansion in tourism and government’s stimulus measures.
Private investment has also risen based on tax collection in the real-estate sector, which has expanded by 20.3 per cent year on year and 17.6 per cent compared to October, while sales of construction materials and commercial vehicles have increased by 2.6 per cent and 15.7 per cent year on year respectively or 0.6 and 12.2 per cent when compared to October respectively.