Thailand’s economy remained sluggish in February as private consumption and exports continued to fall, although tourist arrivals shot up 27%.
In February 2015, the Thai economy continued to recover at a slow pace. Domestic private spending was flat as consumers and businesses remained cautious about spending. Fiscal spending was also flat while merchandise exports were affected by weak demand from China and ASEAN countries.
Nevertheless, the tourism sector continued to expand well and was the main driver of the economy. On the stability front, low global oil prices led to negative inflation and the current account surplus for the second and the fifth consecutive month, respectively
Tourist arrivals up 27%
And for the first 13 days of March, tourist arrivals shot up to 11 million people representing 27.6 percent jump, said Mr Krisda Jinavijarana, head of the Fiscal Economics Office.
For the month of February, exports shrank by 6.1 percent and expansion of consumption on the private sector also shrank as witnessed by VAT collection which increased only 2.4 percent compared to 9.5 percent increase in January.
According to Bank of Thailand latest update
Private investment, as reflected by machinery, equipment and construction indicators, remained flat. Slow recovery in both global and domestic economies had led to excess capacity. In addition, businesses awaiting clarity on government’s projects have not yet invested despite favorable financial conditions as government’s investment on infrastructure was still at an early stage.
Fiscal spending flattened from the preceding month. Although disbursement on capital expenditure increased particularly for transportation and irrigation, purchases of goods and services declined after having accelerated in the previous periods. Meanwhile, government revenue decreased slightly following a drop in revenues from government agencies and VAT compared with the same period last year, reflecting soft recovery in economic activities.
Merchandise exports were weak, particularly exports to China and ASEAN countries due to their economic slowdown, coupled with the effect of the Chinese New Year in this month. Meanwhile, exports to Europe dropped after having accelerated in the previous periods prior to the expiration of Thailand’s benefit from the Generalized Scheme of – 2 – Preferences (GSP).
The private-consumption index dropped 2.6% in February from a year ago, widening from the revised 1.0% on-year drop in January.
Kasikorn Research Center last week lowered the country’s economic growth projection from 4% to 2.8%. Earlier this week, the central bank of Thailand had revised its economic growth projection to 3.8%, down 0.2% from 4% previously.
Thailand’s economy grew 0.7% in 2014 and the Bank of Thailand projected 2015 growth at 3.8% — a downward revision from its previous estimate of 4.0% due to lower China expansion as well as slower-than-expected government budget disbursement.
Flat export growth forecasted for 2015
President of the Thai National Shippers’ Council (TNSC) Nopporn Thepsittha attributed the country’s sluggish exports to the world’s economy which has not seen any sign of recovery. Meanwhile falling global oil prices also affect the shipments of refined petroleum and related products such as chemicals and plastic pellets which in turn affect farm prices, he said.
According to the Commerce Ministry, exports declined 6.14% year-on-year to US$17.2 billion, for a second consecutive month in February due largely to lower global oil and farm product prices.
Shipments of farm products also dropped by 12.5% to $2.49 billion, particularly rubber, while rice, sugar, canned and processed seafood also plunged sharply in February.
Industrial product exports including gold and oil fell by 3.7% to $13.8 billion.
Thailand’s economic growth expected to return to 2019 levels in mid-2023
Although the economy would recover next year, the recovery is still substantially below potential level resulting in a large output loss and could affect Thailand’s potential economic growth in the future with the economy expected to return to 2019 levels in mid-2023.
The Siam Commercial Bank (SCB), one of Thailand’s largest commercial banks, said in its latest economic outlook report that the country’s economy may wait until the second semester of 2023 to return to 2019 growth levels.(more…)
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