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All the economic engines appear to have stopped functioning rendering Thailand’s economic outlook the worst in 40 years, said Mr Thanawat Polvichai, director of the Economic and Business Forecast Centre of the University of Thai Chamber of Commerce.
The contraction of economic growth, the shrinking of export and domestic consumption, farm price slump and delayed disbursement of government’s spending budget have combined to make the private sector feel not confident with the state of the economy, he explained.
Q1 2015 data show economic recovery is not moving as quickly as expected.
At the outset of the year, there were few signs of a pickup in domestic demand. In January, monthly data indicated that both private investment and private consumption remained sluggish.
Exports were also weak in January, suggesting that external demand is still lackluster.
Total export of the whole year which was earlier projected to grow by 4.1 percent has been revised down to 0.4 percent with 3.2 percent expansion of the industrial sector, 1.8 percent of consumption expansion and 3.6 percent growth of private sector’s investment.With the exception of tourism sector which is projected to grow 13.7 percent with 28.8 million tourist arrivals.
Weak exports to hamper growth
Since economic growth is dependent on exports, the centre has painted three scenarios:
if exports grow by 0.4 percent, the growth rate will be 3.2 percent;
if export growth is zero, the economic growth rate will be 2.9 percent ;
if export growth rate registers minus 1 percent, the economic growth rate will be 1.9 percent and if export growth is 1.5 percent, the GDP will be 4.1 percent.
Mr Thanawat said however that there is a slim chance that exports will pick up because Thailand’s major trading partners such as the European Union and Japan are experiencing economic slowdown.
Political climate remains tense
Recently, Thailand’s Supreme Court announced that it would proceed in prosecuting former Prime Minister Yingluck Shinawatra over her rice subsidy scheme. If found guilty, the former premier could face up to ten years in prison, which may well bring an end to her family’s political dominance, or trigger another cycle of demonstrations and street riots.