Govt faces a huge challenge on growth amid bleak outlook
NEXT YEAR a major challenge for the government will be to maintain economic growth at 3 per cent at least, when it is expected that the country’s exports will still face unpredictable situations.
The World Bank has cut its global-growth outlook for 2017 from early estimates of 3.1 per cent to 2.8 per cent.
Key economic engines that will drive economic growth next year include government spending to develop the country’s infrastructure, which is estimated to be worth Bt2 trillion, and tourism.
The tourism target in 2017 is at least Bt36 million although the policy to restrict cheap tour packages from China, so-called zero-dollar tours, is expected to reduce the number of Chinese tourists to Thailand, according to Bank of Thailand Governor Dr Veerathai Santiprabhob.
Two other key economic engines are domestic consumption and exports, with both expected to face difficulties next year.
Domestic consumption is forecast to be impacted by high household debt of about 83 per cent of gross domestic product. High household debt reduces the country’s domestic consumption, which may drop or slightly grow next year compared to this year.
Another factor which could impact the Thai economy is the economic and trade policies adopted by Donald Trump when he becomes US president early next year.
How the Thai government manages the country’s economic policies in relation to the US will be important.
“The [potential US] policy to withdraw from the Trans-Pacific Partnership may benefit Thailand, which is not a member of this agreement. But other policies, especially to protect USA trade benefits, may result in other trade barriers to protect the US market. This will impact on Thailand’s exports to the USA,” Thailand Development Research Institute (TDRI) noted.
The US Federal Reserve’s decision on December 14 to increase interest rates by 25 basis points to 0.75 per cent, the first rise in 2016, will impact Thailand’s capital outflow while the baht has shown signs of weakening against the dollar. This will impact on the price of Thai imports, with rising oil prices exasperating the situation, said TDRI’s research director for International Research and Advisor Service Dr Kirida Bhaopichitr.
The oil price is forecast to be between US$50 (Bt1,800) and $55 per barrel in 2017 compared to an average of lower than $50 per barrel this year, according to PTT Plc.
Thailand’s political situation will also be a challenge for investors and businesses in 2017 and there will be plenty of interest in what will happen with the government’s “roadmap” and |the planned general election in 2017.
