In the first nine months of 2017, the Thai economy grew by around 3.8% from the same period last year. Exports rose, tourism remained strong, household expenditures rose, and private investment gradually rebounded. However, public investment has slowed due to the delays in budget disbursements.
Key Indicators in the First Nine Months of 2017 (9M2017)
Unit: %y-o-y
Private Consumption 3.1 Private consumption continued to expand as farm incomes rose. Moreover, income in the export and tourism sectors boosted consumption expenditures. Government stimulus measures also increase private sector spending.
Private Investment 1.6 Increases in exports and consumption reflected the growth in private sector investment.
Public Investment 0.2 Public investment growth slowed because of delays in budget disbursements and delays in some infrastructure investment.
Export of Goods 9.0 The value of exports, in US dollar terms, accelerated as the economies of major trading partners, such as the United States (US), the European Union (EU), China, and Japan, improved. Commodity prices rebounded such as crude oil, plastic beads, and rubber products. The value of exports in all categories increased especially agricultural products and manufacturing products.
Import of Goods 14.3 The value of imports, in US dollar term, increased. Imports of raw materials and intermediate goods mirrored the rise in exports.
Number of Foreign Tourists 5.1 The strong growth of the tourism industry reflects the return of tourists from China, Russia, the USA, etc., and the improvement of world economy.
TRIS Rating expects that the gross domestic products (GDP) of Thailand will grow by 3.9% in 2017, compared with 3.2% in 2016. We view GDP growth will be stronger in the last quarter of 2017, due to the following factors;
Supporting Factors
Export sector will keep expanding thanks to the improvement of Thailand's major trading economies.
Tourism industry will continue to grow strongly in both numbers and spendings of foreign tourists.
Household consumption will gradually increase as household incomes in agricultural sector rise and market conditions in the export-oriented manufacturing sector improve.
Private investment will gradually recover due to increase in exports.
Risk Factors
US economic policies, such as tax reform or trade sanction, may affect export growth prospect.
Household debt, remaining high but improving, may limit household expenditures or the use of credit.
Thailand Economic Prospects in 2018
TRIS Rating forecasts that the Thai economy in 2018 will grow by around 4%, supported by an ongoing expansion in exports, a strong tourism sector, a gradual recovery in household consumption, and increases in public and private sector investments. However, TRIS Rating is still concerned about the risks in global economy, such as the uncertain policies in the US, the volatilities of commodity prices, and global financial instability that may affect interest and exchange rates. The high level of household debt and the uncertainties of Thai politics are still risks that can affect household expenditures and investor confidence.
Supporting Factors
+ Export sector will continue as the economies of Thailand's major trading partners, such as the US, Japan, and China, continue to expand.
+ The growth of tourism industry is supported by the recovery of wold economy. Bangkok is the best of Global Destination Cites Index. The Bank of Thailand (BOT) forecast that the number of foreign tourists in 2018 will reach 37.3 million.
+ Private consumption will expand because farm income is likely to improve as agricultural production recovers. Moreover, income in the export-oriented manufacturing sector and the tourism sector will increase. Government would use policies to stimulate consumption, such as tax policy for tourism, and policy in rising minimum wage.
+ Public investment and consumption will grow in 2018. This is because the government should invest in infrastructure in the Eastern Economic Corridor (EEC) and accelerate the budget disbursement and procurement processes of many key infrastructure projects. The 2016-2017 Transportation Action Plan calls for construction to begin in many projects.
+ Private investment should gradually recover especially in export and property development sectors.
Risk Factors
- The risks from the global economy and commodity prices will continue. The US economic policies, such as trade barriers, may affect investor confidence and exports. Other external risk factors include the effect of BREXIT, the uncertainty of monetary policies of the US, Europe, and Japan, and fluctuations in commodity prices worldwide. Other potential risk factors involve terrorism and prolonged geopolitical problem.
- The uncertainties of Thai politics, such as the election planned for later this year, may still affect the Thai economy and investor confidence.