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Ongoing political uncertainty, exports slump, rising household debt and a lack of reform momentum are now increasingly seen as likely to undermine Thailand’s economic growth.
Thailand’s sluggish economic recovery and the depression in the global economy have prompted the Bank of Thailand to cut its GDP growth forecast for the full year to slightly below 3%
In the second quarter of 2015, the Thai economy recovered at a pace close to the previous meeting’s assessment. Nevertheless, going forward, the economic outlook was subject to more negative factors, leading to a slight downward revision of the growth projection for 2015 from the previous meeting.
said the BOT
The National Economic and Social Development Board (NESDB) also stated that the Thai economy slowed to 2.8% growth in the second quarter, down from 3% in the first quarter, while Credit Suisse expects full-year GDP growth of 2.5% for the country.
NESDB also predicts exports will contract 3.5 percent from an earlier estimate of a 0.2 percent gain and government spending will rise 11.6 percent in the second half.
“The yuan devaluation is not good news for Thailand, as it will put more pressure on our exports,”
Pimonwan Mahujchariyawong, a Bangkok-based economist at Kasikorn Research Co., said to Bloomberg News Agency.
Household debt reaches 80% of GDP
The National Economic and Social Development Board (NESDB) says household debt has risen 6.4% to 10.57 trillion baht in the first quarter of this year, while credit card defaults also rose 28%in the second quarter.
NESDB secretary-general Arkhom Termpittayapaisith said household debts in the first quarter of 2015 stood at 10.57 trillion baht, representing a 6.4% growth or 79.9% of GDP.
Meanwhile unpaid bills of consumers credits in the second quarter also rose 7%, while debt payment defaults also shot up 15.5%.
But significantly credit card defaults also increased to 28%, though still not yet reaching alarming rate, but need close monitoring of defaults, he said.
Thailand is among the most rapidly ageing countries in the world
The UN has projected the share of people older than 65 years of age in Thailand will increase from 10.5% of the population this year to 19.5% and 25.9% in 2030 and 2040, respectively. Thailand will become a super-aged society by about 2030.
Political climate in Thailand to remain highly volatile
A risk of renewed political instability that poses a salient risk to investors and businesses. In addition, the insurgency in southern Thailand is also a threat, the unit of Fitch group said in a report entitled “Political Risk Analysis: Political Risk to Investing in Thailand”.
Investors may suffer from renewed instability and the policy uncertainty that comes with it.