The National Economic and Social Development Board (NESDB) revealed the latest economic figures in 2014 showing the country’s economic growth falling to 0.7%, its lowest record in three years.
Political unrest in the first half and falling prices of key crops and falling exports were key factors to the fall. NESDB said gross domestic product rose 0.7% last year, the slowest pace since 2011 of 0.1 per cent when the country was battered by devastating floods, and down from the 2.9 per cent recorded in 2013.
GDP rose 2.3% in Q4, making 3.5% forecast for 2015 possible
Gross domestic product rose 2.3 percent year-over-year in the fourth quarter following the 0.6 percent rise in the third quarter, data from the National Economic and Social Development Board showed. This was faster than the 2.1 percent increase expected by economists.
The NESDB maintained its 2015 growth at 3.5% to 4.5% while cutting its export growth estimate to 3.5% from 4%.
The expansion of GDP in this quarter was due to an upturn in the non-farming sector, a rise in domestic and external demand and greater investment, it said.
Consumption expanded 2.4% last quarter from a year earlier, compared with 1.8% in the previous three month period, while investment climbed 3.2% from 2.9%.
High household debt burdens
While lower oil prices will dampen inflation and raise consumers’ real purchasing power, high household debt burdens will continue to constrain private consumption growth, experts said.
The Bank of Thailand held its benchmark interest rate at 2 percent for a seventh straight meeting last month, citing weak outlook for exports and domestic demand
The Thai economy is expected to recover steadily but at a slower pace than previous forecast due to a weaker outlook of both domestic demand and exports. On the domestic side, consumption is expected to gradually recover on the back of improving nonfarm income and employment, as well as lower oil prices. However, durable consumption, especially automobile purchases, is still impeded by high household debt and depressed farm income.
In addition, government spending, particularly on investment projects, is likely to be lower than previously anticipated.
Consumption of the private sector or expenditure of the private sector expanded at a lower rate because of lower income of the agriculture sector and increasing household debts.
The central bank also predicted that next year’s inflation would be 1.2 percent compared to this year’s 1.6 percent and exports for next year were expected to grow just one percent instead of 4 percent as earlier projected.
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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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