Thailand’s growth slowed to an estimated 2.5 percent in 2019 from 4.1 percent in 2018, due to external and domestic factors.
The economy is projected to pick up moderately to 2.7 percent in 2020 as private consumption recovers and investment picks up due to the implementation of large public infrastructure projects.
As Thailand seeks to transition to high-income status by 2037, boosting productivity and reviving private investment will be critical, according to the World Bank’s Thailand Economic Monitor report, released today.
Global economic growth is forecast to edge up to 2.5 percent in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist.
Risks include a re-escalation of trade tensions and trade policy uncertainty
These risks include a re-escalation of trade tensions and trade policy uncertainty, a sharper-than-expected downturn in major economies, and financial turmoil in emerging market and developing economies.
“A continued deceleration of economic activity in large economies, China, the Euro Area, and the United States, could have adverse repercussions across the East Asia region, through weaker demand for exports and the disruptions of global value chains.”Birgit Hansl, World Bank Country Manager for Thailand. “
Financial investment, commodity, and confidence channels could further weaken the global economy and adversely impact Thailand’s exports.”
Declining exports and growing weaknesses in domestic demand
In 2019, declining exports and growing weaknesses in domestic demand were the key drivers of the slowdown in growth in Thailand.
Agricultural commodity exports declined by 7 percent in the first three quarters of 2019, led by sharp decreases in export volumes for major products such as rice and rubber. Manufacturing exports declined by 6 percent in the same period, with electronics exports hardest hit.
Thailand’s strong currency, which has appreciated by 8.9 percent since last year, making the baht the strongest it has been in six years, has also impacted international tourism and merchandise exports.
Accommodative monetary policies and a fiscal stimulus package
The government has responded swiftly to the growth slowdown, through accommodative monetary policies and a fiscal stimulus package to boost economic growth.
Going forward, the report recommends the governments consider policies to enhance the effectiveness of the stimulus by focusing on implementing major public investment projects, improving the efficiency of public investment management, and providing social protection coverage for vulnerable families.
The recent growth slowdown has highlighted Thailand’s long-run structural constraints, with slowing investments and low productivity growth. In the last decade, Thailand’s productivity growth has fallen to 1.3 percent over 2010-2016 from 3.6 percent over 1999-2007.
Private investment has halved from 30 percent of GDP in 1997 to 15 percent in 2018, as foreign direct investments slowed, and progress stalled on projects under the Eastern Economic Corridor.
The report projects that if current trends continue, with no significant pickup in investment and productivity growth, Thailand’s average annual growth rate will remain below 3 percent.
To achieve its vision of being a high-income country by 2037, Thailand will need to sustain long-run growth rates of above 5 percent, which would require a productivity growth rate of 3 percent and increase investment to 40 percent of GDP.
“Boosting productivity will be a critical part of Thailand’s long-term structural reform,” said Kiatipong Ariyapruchya, World Bank Senior Economist for Thailand.
“Increasing productivity, particularly of manufacturing firms, will depend on increasing competition and openness to foreign direct investments, and improving skills.”Kiatipong Ariyapruchya, World Bank Senior Economist for Thailand
Sustaining higher productivity growth will require removing constraints that prevents new firms, especially foreign firms, and skilled professionals from entering the domestic market.
These constraints include lifting restrictive laws, particularly for the services sector, implementing the new Competition Act with clear guidelines related to state-owned enterprises and price controls, and developing policies to build the skills and human capital needed for an innovative knowledge-based economy.
Thai fruit exports to FTA markets up 107 percent
China, Malaysia, Singapore, Indonesia, the Philippines, Hong Kong, Australia and Chile are top importers of Thai fruits, especially fresh durian, mangosteen, longan and mango. Thai exporters are able to benefit from FTA privileges.
BANGKOK (NNT) – Thailand’s fruit exports continue to increase, despite the sluggish global economy caused by the COVID-19 pandemic, with key trade partners being countries that have free trade agreements (FTAs) with the kingdom.
The Future of Asia: greener but with a public and private debt hangover
The COVID-19 pandemic has been a perfect storm, destroying jobs, worsening poverty and inequality, and creating a public and private debt problem—especially for countries and firms already in fragile financial health beforehand
50:50 campaign may not get immediate extension
BANGKOK (NNT) – The government’s 50:50 co-pay campaign expiring on 31st March may not be getting an immediate campaign extension. The Minister of Finance says campaign evaluation is needed to improve future campaigns.
The Minister of Finance Arkhom Termpittayapaisith today announced the government may not be able to reach a conclusion on the extension of the 50:50 co-pay campaign in time for the current 31st March campaign end date, as evaluations are needed to better improve the campaign.
Originally introduced last year, the 50:50 campaign is a financial aid campaign for people impacted by the COVID-19 pandemic, in which the government subsidizes up to half the price of purchases at participating stores, with a daily cap on the subsidy amount of 150 baht, and a 3,500 baht per person subsidy limit over the entire campaign.
The campaign has already been extended once, with the current end date set for 31st March.
The Finance Minister said that payout campaigns for the general public are still valid in this period, allowing time for the 50:50 campaign to be assessed, and to address reports of fraud at some participating stores.
The Fiscal Police Office Director General and the Ministry of Finance Spokesperson Kulaya Tantitemit, said today that a bigger quota could be offered in Phase 3 of the 50:50 campaign beyond the 15 million people enrolled in the first two phases, while existing participants will need to confirm their identity if they want to participate in Phase 3, without the need to fill out the registration form.
Mrs Kulaya said the campaign will still be funded by emergency loan credit allocated for pandemic compensation, which still has about 200 billion baht available as of today.
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