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Export gains prompt another GDP revision

Feb 19. 2018
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AN INFLUENTIAL forecaster has raised its estimate for 2018 economic growth to 4.4 per cent, citing stronger than expected expansion in the economies of Thailand’s trading partners and the sustained gains in exports and tourism.

The University of the Thai Chamber of Commerce Centre for Economic and Business Forecasting had earlier estimated growth of 4.2 per cent for this year. 

Thanawat Polvichai, the centre's director, said that this year could mark the first in more than six years that the economy achieves growth in gross domestic product of more than 4 per cent.

The revised growth estimate also takes into account stability in the country’s politics, as a general election has been promised for late this year under the military government’s so-called roadmap for a return to democracy, said Thanawat, who noted that the baht is trading at around 31 to the US dollar. 

“We forecast the Thai economy will expand in a range of 4.2 to 4.6 per cent this year as the global economy has started recovering as a result of the upward trend in US interest rates, plus growing Thai exports and tourism income,” he said. “Prices of agricultural products have also started improving. Our earlier estimate in October 2017 was for growth in a range of 4 to 4.5 per cent.”

An estimate for growth in exports this year was raised to 6 per cent from an earlier projection of 4.3 per cent, he said. Public investment is expected to increase 10 per cent and this could help boost private investment, Thanawat said. Last year, public investment contracted 1.2 per cent.

Thanawat said the second quarter of this year is expected to see an even stronger recovery. Inflation is expected to come in 1.3 per cent, while the unemployment rate has been revised up from 0.9 per cent to 1.1 per cent due to the recent increases in the minimum daily wages, he said.

Other negative factors come in the form of uncertainties over the United States’ economic policies and the upward trend for US interest rate, along with the baht’s appreciation relative to the currencies of Thailand’s major trading partners, he said. This year, the baht has gained by 4 per cent. 

Also of concern is Thailand's high household debts, resulting in more caution from lenders, Thanawat said.


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