Thai Economy Outlook Brighter On Stimulus And Political Stability

By Minggu Simon Lhasa BANGKOK, July 10 (Bernama) -- Almost two months after a coup, Thais are increasingly optimistic about their economy, thanks to a number of stimulus measures implemented by the military junta as well as political stability. Generally, the country which was on the verge of recession earlier, is expected to register growth of between 1.5 to 3.0 per cent this year. Vasin Vanichvoranun, Executive Vice President of Kasikornbank, said the Thai economy and business will witness a recovery thanks to three main factors. They are the acceleration in the financial year 2014 budget disbursement along with the preparation of Budget 2015 effective Oct 1 this year, approval of the Board of Investment (BOI) promotion projects worth more than US$21.75 billion (700 billion Baht) and the government's payment of 92 billion Baht owed to farmers under the rice pledging scheme. (US$1 = 32.18 baht) These impetus will boost the Thai Gross Domestic Product (GDP) in the second half to 4.3 per cent. This will see the 2014 GDP average rise to 2.3 per cent from the earlier projection of 1.8 per cent, Vasin said. The higher GDP will stem from the brighter outlook in key areas, including government spending, private investment and consumption. Meanwhile, exports, another GDP constituent, are expected to pick up to a three per cent growth, from the negative 0.2 per cent in 2013. Infrastructure-related businesses, especially building contractors are set to receive a windfall from public spending, leading to greater cash injection into the system. Prospective projects that would open for bid during 2014-2015 may be worth a combined 480 billion Baht, says Kasikornbank. Most are transport-related projects, namely the Suvarnabhumi Airport Development Project Phase 2, Don Mueang Airport upgrade, the dual-track railway project and Green Line electric train extension. The real estate business is thus likely to enjoy higher growth of 5.8 per cent in the second half, with housing completions in the Bangkok Metropolitan Region (BMR), likely to expand 3.4 per cent, compared to the negative 13.1 per cent in the first half of 2014. Meanwhile, household spending will rise in the second half due to higher consumer confidence. Increasing cash in circulation has stemmed partly from the government's payment of the long-overdue 92 billion Baht owed to farmers under the rice pledging program, a key contributor to growth in the retail sector and consumer goods spending amid renewed demand in the market. In addition, exports in the second half are expected to witness remarkable growth over the first half, albeit the downward revision of 2014 growth to three per cent from five per cent. Among major beneficiaries would be the automotive industry which is expected to grow 12 per cent in the latter half of this year, after the three per cent improvement in the first half. Kasikornbank noted that projects applying for BOI promotional privileges, and now pending approval, are worth more than 400 billion Baht this year. These projects, to be implemented at the earliest, are expected to be a boon to the overall economy in the second half of the year, it said. Vasin concluded that amid positive signs in the Thai economy in the second half, financial transactions via Kasikornbank may be not less than 24 trillion Baht, thus significantly boosting its fee income in the period to over the first half. He said the bank's fee income for the 2014 entire year may thus enjoy growth of 10 per cent, as targeted. Meanwhile, the University of the Thai Chamber of Commerce (UTCC) foresees the Thai economy to grow by an average four per cent a month in the second half of the year, thanks to more consumer confidence and effectiveness of the military junta's measures to stimulate investment and spending. Its survey revealed better confidence in the economy will spur spending during the upcoming long weekend, reaching 5.26 billion baht. Spending on Asarnha Bucha Day tomorrow, the Buddhist Lent Day on Saturday and the rest of the weekend, will grow by 5.43 per cent this year from 4.97 billion baht last year, it said. The Thai economy will show a clearer sign of recovery in the third quarter of 2014 with the 100 billion Baht government's budget disbursement as well as recovery export and tourism," said Thanavath Phonvichai, director to the UTCC’s Economic and Business Forecasting Centre. He said the Thai economy this year should grow not less than two per cent, while the first half performance was flat. The UTCC projects Thailand's economy to grow by 3-4 per cent on average in the third quarter and 5-6 per cent in the fourth. --BERNAMA