Thai economy in 2017-2018: Growth continues, but not broad-based.

Stocks and Financial Services Press Releases Thursday September 28, 2017 13:31
Bangkok--28 Sep--Siam Commercial Bank

EIC adjusts the forecasts for Thai GDP growth in 2017 upward to 3.6% from 3.4% as export outperforms our expectations. The synchronized recovery of major economies- the U.S., the Euro area and Japan- is happening for the first time in many years. As a result, Thai exports grew 8.9% during the first 8 months of the year, led by exports of agricultural products, food and beverages and electronics components. EIC assesses that export growth will continue and expects export value in 2017 to rise by 7%, the highest growth over the past 6 years. Moreover, the tourism sector displays a bright outlook. EIC forecasts the number of foreign tourist arrivals to reach 35.2 million persons in 2017, up 7.9% from last year.

Purchasing power of Thai households has yet to improve following higher demand from abroad. While high income earners have increased their spending especially on durable goods, as seen in a high growth of passenger cars, spending by mid and low income earners remain subdued. Sluggish spending on necessary goods like food and beverages is inline with the trend of farm income which has fallen since the middle of this year and non-farm income that has been stagnant. In addition, EIC views that households will tend to slow down taking out new debt because existing debt burden is still high and tightening measures on credit cards and personal loans based on income groups have taken effect since the third quarter of 2017.

EIC forecasts the Thai economy to grow 3.5% in 2018, backed by both public and private investment. On top of the government's investment in transportation infrastructure, positive signals for more private investment in 2018 have been more evident: rising capacity utilization in the manufacturing sector, interests of foreign investors to take part in the Eastern Economic Corridor (EEC), and the penetration of e-commerce businesses in Thailand. Development in e-commerce will trigger demand for transportation, storage and distribution facilities, as well as data collection and analytics infrastructure. However, labor shortage resulted by the new law on migrants as well as sluggish spending growth by most households will also be key determinants of investment in 2018.

In EIC's view, businesses should keep up with the new paradigm in economic and business platforms as digital consumers are on the rise. Markets for digital consumers are rapidly expanding in Thailand as well as in ASEAN, India and China. Altogether, there are over 3 billion consumers among these markets. This illustrates a great potential to create tremendous opportunities and value for businesses. EIC views that e-commerce businesses will thrive in 2018with expansions in both service providers and consumer base. Business models that place an emphasis on digital consumers and how to meet their needs will play an important role in driving businesses in the future.


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