Bloomberg sees strong second half economy, problems ahead

Thailand’s economy may gain more momentum in the second half after registering above-trend growth in the first (1H), said a report from Bloomberg Intelligence (BI).
“Looking ahead to 2018 though, the drivers of much of this strength may fade,” said BI economist Tamara Henderson. “The minutes from the central bank’s September policy meeting indicate that another rate cut to speed up the return of inflation to the target would bring more problems than benefits. This suggests the Bank of Thailand may keep its interest-rate settings unchanged through next year.”
GDP expanded 3.5 per cent year-on-year in 1H, above the 10- and 20-year averages of 3.1 per cent and 3.3 per cent. The BOT expects even stronger growth in 2H (3.8 per cent overall for 2017), propelled by merchandise exports and tourism.
Tighter labour markets in the US, euro zone and Japan suggest this momentum will persist. In addition to stronger global demand, exports benefitted from the relocation of supply chains to Thailand.
New direct flights between China and Thailand’s major tourist destinations also increased the number of visitors from the mainland.
The end of a one-year mourning period for the revered late King Bhumibol Adulyadej, who ruled for 70 years, may also lift consumption in the fourth quarter. The five-day funeral begins on October 25, with the day of cremation on October 26 declared a public holiday.
The memorial will be followed by the coronation -– expected in December – of King Maha Vajiralongkorn. Both events are expected to attract visitors to Bangkok and could spur discretionary spending by households.