The Bank of Thailand says Thai economy recovered from the first quarter setback in the second quarter of this year, while business confidence is also improving, but exports are likely to miss the target.
Although highly criticized by western democracies, the military takeover and resulting stability has restored Thai confidence. The stock exchange is on the rise, the baht is appreciating and domestic investment is at an all-time high.
Desperate farmers who were left penniless by the former government’s rice-pledging scheme have finally been paid. Tourists are starting to come back to Thailand but despite of recovery sign, exporter association concedes that the country’s export might not reach the growth target this year.
Exit from EU trade preference scheme may impact exports
Exporters will start to feel the impact next year from the European Union’s decision to curtail trade cooperation and trade visits with Thailand and the downgrade of the country by the US to the lowest standing in its annual Trafficking in Persons (TIP) Report although their good orders are not yet affected for the time being.
As Thailand is set to exit from the EU Generalized System of Preference Scheme at the end of this year, he said exporters are calling for the government sector to quickly arrange measures to assist them.
Don Nakornthab, Director of BoT’s Macroeconomic Policy, said Thailand’s gross domestic product (GDP) growth for the second quarter was 1-1.1 percent above the quarterly average, reflecting a strong comeback from the first quarter decline of 0.6 percent.
The second quarter economic growth is, however, down by 0.4 percent compared with the same period of last year, he said. But he said even though the expansion would be negative, the recovery is considered substantial.
He said the economy has passed its lowest point and has a tendency to go up since April this year.
He attributed the second quarter economic improvement to expansions of industrial sector, private spending and private consumption.
The senior BoT official conceded that the country’s export still faces slow recovery due to weak demands for agricultural, processed agricultural and automotive products in the Asian region.
Thailand’s export in May shrunk by 1.2 percent year on year, he said, adding that the country’s export value has to reach 20,000 billion US dollar each month from June to December in order for the country to achieve the annual growth target of 3.5 percent, set by the central bank.
Inflation in June this year fell by 0.10 per cent compared with that in May, becoming the first decline in 10 months, the Commerce Ministry’s advisor Ampawan Pichalai said.
Contributing factor to the decline was the economic measures announced and implemented by the National Council for Peace and Order, she said.
Such measure, she said, was the NCPO’s decision to freeze diesel and household cooking gas prices and its call for manufacturers and other producers to freeze their product prices for six months.
But year-on-year inflation in June rose by 2.35 per cent and inflation in the first half of this year stayed at 2.23 per cent.
Thailand’s Ministry of Finance expects 3.5 to 4.5% economic growth in 2022
For next year, the Ministry of Finance is projecting an economic growth of 3.5-4.5% from effective pandemic control measures, incentives, domestic spending, the export sector, private investment support, global economic recovery, and government expenditures.
BANGKOK (NNT) – The Ministry of Finance is now projecting an economic rebound to 4.5% growth next year, with government investments serving as key drivers. The Minister of Finance says the government will focus more on inclusive growth next year, with no sectors left behind.(more…)
Pakorn Peetathawatchai, President, The Stock Exchange of Thailand (SET)
What measures has SET taken to support listed companies’ compliance with ESG standards?
PAKORN: When we first began promoting ESG-compliant investments, we were met with little interest. We attributed this to a lack of clear data to showcase the economic benefits of ESG investment, and perhaps limited clarity as to what constitutes a sustainable or ESG-compliant investment. The launch of the THSI list and, subsequently, the SETTHSI Index, was designed to address this. Our most recent data, comparing returns for the SETTHSI Index with the broader SET and SET100 indices from April 2020 to April 2021, underscores the economic benefits of these investments: the group compliant with ESG standards outperformed the other two indices on every data point.
As of May 2021 Thailand was home to CG and ESG assets under management totalling BT54.8bn ($1.7bn) across 50 funds – up from 23 funds in 2019. Meanwhile, of the BT187.1bn ($5.9bn) raised in green, social and sustainability bonds since 2018, BT136.4bn ($4.3bn) was raised in 2020 – 83% from the government and the remainder from development banks and private players. This rising demand, in a move to manage risk and generate returns, has been complemented by growing supply and promotion: supply from ESG-compliant businesses aiming for resiliency and sustainable growth, as well as promotion from regulators highlighting investment opportunities with good CG and SD practices. Indeed, the pandemic has been a catalyst in shifting the view of ESG compliance from a luxury to a requirement in the new normal.
In what ways can enhanced standard-setting and regulatory mechanisms overcome the remaining barriers to improved ESG performance?
PAKORN: A multi-stakeholder approach is crucial for enhanced ESG performance – not only in Thailand, but around much of the globe. This can also help to address the standout incumbent challenge: access to reliable, wide-ranging ESG data. For example, the 2020 update to the 56-1 One Report established clear ESG standards and triggered online and offline capacity-building programmes to support listed firms’ compliance. SET is developing an ESG data platform with a structured template to promote the availability of comparable data, maximise value added from corporate sustainability disclosures, and foster collaboration between the business value chain and stakeholders. This is expected to support Thai companies along their ESG journey in an economically sustainable way, result in a greater number of sustainability-focused products and services, drive sustainable investing in the Thai investment community and ultimately “make the capital market work for everyone”, as outlined in the SET’s vision.
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