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Siam Commercial Bank focuses on growing urbanisation

The Siam Commercial Bank Economic Intelligence Centre (SCB EIC) urges business operators to focus on the growth of urbanisation outside greater Bangkok. The urbanisation rate in Thailand is lower than in some neighbouring countries at 31 per cent

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The Siam Commercial Bank Economic Intelligence Centre (SCB EIC) urges business operators to focus on the growth of urbanisation outside greater Bangkok. The urbanisation rate in Thailand is lower than in some neighbouring countries at 31 per cent

Original article:
SCB focuses on growing pool of urbanised

Dr Sethaput Suthiwartnarueput, executive vice president and chief economist at the bank, discusses the SCB EIC research in a report called “Looking Beyond Bangkok”. The report says urbanisation in the provinces is important for developing the country and producing goods for domestic consumption. The recent economic crisis showed that the country should not rely on exports only. Production of domestic goods and their sale within the country are also important.

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Many countries in Asia are very interested in the urban middle class, which is key in driving the economy.

The growth of the urban middle class in China is expected to soar to 75 per cent in 2025 from 29 per cent at present.

“The urbanisation will help support domestic consumption because the urban consumer class has higher income than rural consumer class,”

he added.

The middle class in urban province is key role for developing country because those represent the transparency not only represent the growing economy and higher income, he said. The urbanisation rate in Thailand is lower than in some neighbouring countries at 31 per cent compared with Indonesia’s 53 per cent and Malaysia’s 71 per cent for example.

Although private investment has joined the rebound in Thai economy, the outlook remains weak relative to other demand

Thailand’s GDP growth remains largely tied to external demand and developments in advanced economies will continue to dominate the path of the economy in the short- and medium-term. The external environment has been relatively more favorable in the past six months as the effects of fiscal and monetary stimulus are felt and inventories in the advanced economies are being replenished, supporting production into the medium term.

Fiscal stimulus in China offset the decline in Thailand’s exports and is playing a role in the region’s rebound

The key risk to the global recovery lies in the need to get the timing of withdrawing fiscal and monetary stimulus just right. Withdrawal of fiscal stimulus too early may lead to another negative demand shock and a negative expectations spiral, whereas withdrawing the stimulus too late may lead to high inflation, further weakening of the US dollar, and possible asset price bubbles.

In Thailand, for example, more than ten years since the 1997/1998 financial crisis banks still have bad loans in their books and the government still holds a large amount of debt related to the recapitalization of financial institutions. Given the expected length of recovery, it is important not to withdraw stimulus programs too soon, before the recovery is on a firm footing. On the other hand, macroeconomic imbalances are accumulating and eventually fiscal and monetary authorities, especially in the US, must consolidate their fiscal position and withdraw liquidity.

Most of the infrastructure development in Thailand has been responsive to demand rather than forward-looking. Availability and accessibility appear to no longer be a challenge. The next step for Thailand is to put more emphasis on quality of service delivery, management, and sound regulation.

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SCB focuses on growing pool of urbanised

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