Thai Growth Revised Up

Thailand’s leading business groups raised economic forecasts on Tuesday, citing stronger-than-expected exports and signs of recovery in private consumption and investment.

The higher forecasts suggest Southeast Asia’s second-largest economy may finally be gaining traction, though growth continues to lag its regional peers, Reuters reported.

The country’s top business group raised its 2017 economic growth forecast to 3.7-4.0% from 3.5-4.0% projected earlier.

Exports, a key driver of the economy, are now expected to increase 6.5-7.5% this year, compared with 3.5-4.5% seen earlier, Jane Namchaisiri, chairman of a joint committee of the Federation of Thai Industries, the Thai Bankers’ Association and the Thai Board of Trade of Thailand, told a briefing.

“Exports performed better than expected in the first eight months of the year and are likely to increase steadily, thanks to a recovery in major trade partners’ economies,” he said.

In January-August, exports grew 8.9% from a year earlier, customs data showed, with electronics leading the gains.

The Thai National Shippers’ Council on Tuesday also raised its 2017 export growth outlook, to at least 6% from 5%, but said the baht’s strength was a risk. The baht has appreciated by 6.9% this year, the most among Asian currencies.

Jane also sought to downplay another major concern for Thailand’s government and its exporters: the potential for US trade protectionism.

The United States is Thailand’s number-two export market after China, and President Donald Trump said on Monday he wanted to reduce its trade deficit with Thailand.

Jane said the deficit was small compared to that of other countries and that US imports from Thailand were often made by US companies “so they benefit Americans already”.

Last week, the Bank of Thailand shrugged off calls from the government and businesses to cut interest rates to hold down the baht, and upgraded its 2017 economic growth forecast to 3.8% and its export outlook to an 8% increase.

After years of weakness, exports started to recover in 2017, while the number of tourists hit a record in August. The economy expanded 3.2% last year.  Meanwhile, Thailand’s military government is looking to start construction of projects under a 1.5 trillion baht ($45 billion) investment plan before the country’s possible return to democracy late next year.

Enabling laws for the so-called Eastern Economic Corridor initiative should be in place by the end of 2017 to bolster investor confidence, and construction of some of the planned infrastructure could begin next year, Kanit Sangsubhan, the secretary-general of the office overseeing the plan, said in an interview.

“We’re in a rush,” Kanit said in Bangkok. “We want to make sure everything is ready by the time the new government comes in.”