World Bank projects Thailand’s GDP growth at 4% for 2014

As the global economic recovery gain strength, real GDP is projected to expand by around 4% in 2014. Exports of goods are likely to grow by around 6% after contracting last year, and private investment by around 5%.

Risk factors that could derail economic expansion included the high level of household debt and the investment delay in the government’s infrastructure development projects.

A senior economist at World Bank’s Bangkok Office Ms Kirida Phaophichit said exports are forecast to grow by 6% with a total worth of US$238.92 million and imports expected to increase by 5%, worth US $229.99 million, for an expected trade surplus of US$8.93 million.

Thailand’s Paddy Pledging Program outcomes

While the program has helped raise incomes of participating farmers, it has been very expensive. The Program is estimated to cost the Government around Bt200 billion or almost 2% of GDP each harvest year since 2012 (see World Bank East Asia Update report, October 2013).

Many countries, including the EU, that have implemented large agricultural subsidy programs have found them to be costly and that they have reduced competitiveness of the agricultural sector, while the most successful programs that supported and strengthened the agricultural sector had focused on raising agricultural productivity and helping the poor.

Political uncertainty is another main negative factor that could hurt the tourism industry, disrupting continuation of policy implementation by the government, which will erode investors’ confidence. In the long term, the government should give importance to widely distributing spending   across the country to minimize the problems of social inequality.

The senior economist said this could be done by focusing on spending in regions and reducing controls on income distribution from central agencies, and giving local units more responsibility.She said last year the country’s GDP grew by only 3% because of a slowdown in exports, household consumption and private investment and delay in government spending. But the tourism sector posted a historic expansion of 20% in 2013 over 2012, and was a major factor in boosting economic growth last year, she added.

Thailand is lagging other countries in the region

which are recovering faster from the global financial crisis. Part of this is explained by a shift in global demand for products made in Thailand such as hard disk drives. However domestic factors were also important, including household de-leveraging after a rapid expansion of household debt, slowdown in government spending and withdrawal of global financial crisis-related stimulus measures.

• As the global economic recovery gain strength, real GDP is projected to expand by around 4% in 2014. Exports of goods are likely to grow by around 6% after contracting last year, and private investment by around 5%. Consumption is expected to remain subdued. Downside risks could stem from the continuation of the political uncertainties whose impact on investment and tourism will last over the duration of the protests and would disrupt Government policies and investments as well as distract it from longer term development issues.

• Taking a longer term perspective, this Monitor finds that a focus on the spatial distribution of public spending, the organization of local governments, and accountability at the local levels can support a more inclusive pattern of growth in the future.