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Tourism and fiscal stimulus expected to fuel 3.3% GDP growth

Apr 28. 2016
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By The Nation

THE FISCAL Policy Office (FPO) has expressed confidence that gross domestic product (GDP) will grow by 3.3 per cent this year, driven by expanding tourism and fiscal stimulus measures.

Kulya Tantitemit, deputy spokeswoman for the Finance Ministry, said GDP was expected to grow within the range of 3.0-3.6 per cent in 2016. Last year’s growth was 2.8 per cent.

Aside from rising tourism, state spending is tending to rise, particularly on transport infrastructure, water management and road-transport development, she said.

In March, the number of foreign tourists climbed by 15.4 per cent year on year and by 15.5 per cent in the first quarter.

Consumption and private investment are expected to make gradual recoveries on satisfactory farm income and employment, drops in crude-oil prices and low interest rates. The government’s stimulus measures could also help promote expansion of domestic spending.

However, exports could run up against uncertainties in the global economic recovery, particularly China’s economic slowdown and structural problems in Thailand’s export sector.

Headline inflation is forecast at 0.3 per cent this year on expectations of higher demand pressures, according to the FPO.

Kulya said the estimated headline inflation was still low after expected drops in global oil prices.

March inflation stayed in negative territory, at minus 0.5 per cent, and core inflation was 0.8 per cent. In the first quarter, headline inflation was minus 0.5 per cent, while core inflation was 0.7 per cent.

The country’s trade balance is expected to rise because of contraction in imports following declining crude-oil prices. Thailand is expected to enjoy a trade surplus of about US$38.5 billion (nearly Bt1.35 trillion) or 9.7 per cent of GDP.

Warotai Kosolpistkul, deputy director-general of the FPO, said private consumption was signalling a slowdown, reflecting in a 1.6-per-cent contraction in value-added tax at constant prices in March and a 0.1-per-cent rise in the first quarter.

On the fiscal front, state-budget disbursement last month rose 3.2 per cent year on year to Bt259.4 billion, with disbursement in the first quarter of this year (second quarter of fiscal year 2016) at Bt680 billion.

Net government revenue collection in March increased 15.1 per cent year on year and edged up 4.5 per cent in the first quarter.

The government budget had a deficit of Bt77.8 billion in March and Bt204.8 billion in the first quarter of the calendar year.

The country’s public debt stood at 44.1 per cent of GDP at the end of February. International reserves at the end of March were $175.1 billion, about 3.3 times the short-term debts, Warotai said.

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