The Thai economy will expand by 3.5% this year, to be spurred by the government’s economic stimulus measures, according to the Thai Military Bank (TMB).
Chief Executive of TMB Bank Boontak Wangcharoen said the Thai economy will begin to recover this year, mostly in the first half, on the heels of expected higher government spending, increased private investments, and tourism growth.
However, Boontak also mentioned risks to the Southeast Asian country’s growth, including the volatile global economy, drought crisis, changes to the U.S. Federal Reserve’s interest rate policy, threat of capital outflows, and China’s slowing economy.
The executive explained that the Fed’s decision has a direct effect on new investment into Thailand. The drought situation, which is likely to be severe this year, will also impede the economy as it slows the recovery of the agricultural sector.
The Thai export sector is likely to experience the direct impact of the Chinese slowdown, he added.
On the other hand, Siam Commercial Bank (SCB) predicts that 2016 will be the year of investment for Thailand, but forecasts a lower 2.5% growth for the economy.
SCB’s Economic Intelligence Center said this year will see government spending on infrastructure projects and a rebound in private sector investments after a contraction in 2015.
However, like TMB, the center predicts the negative impact on the Thai economy, especially its export sector, of the cooling economy of China as well as the low oil prices.
Thailand also faces internal problems, such as low agricultural product prices, the drought crisis, and high household debt, it said.
Meanwhile, the Bank of Thailand, the country’s central bank, cautioned that the global economy continues to be a major risk factor to the stability of the nation’s financial system. The economic slowdown of China, other Asian countries, and the European Union, coupled with differences in the monetary policies of major economies, will also result in continued high volatility in markets, it said.
Photo: Takeaway
