Current Economic Situation and Outlook in Thailand
Kobsak Pootrakool
2 February 2015
Key questions
 What is the progress of the economic recovery in Thailand
since the Coup D'état?
 What is the economic outlook for 2015?
 What are the key risks?
1
Key summary of the economic outlook
 The Coup d'état has resulted in a sharp improvement of sentiments
of consumers and businessmen.
 Nevertheless, the rebound in economic activities has not been
as quick as previously expected with mixed results across sectors.
 Consumers in the low income brackets experience much lower
income prospects; those in the middle income segment still
burdened with the debt obligation from 1st car programs; the
best performing sectors are those related to high income families.
 On the business side, sectors related to infrastructure spending
have renewed hopes on the government infrastructure projects
but many still adopt wait-and-see approach.
2
Key summary of the economic outlook
 The baseline growth outlook for 2015 is around 4%.
 The key challenges of the Thai economy is not the recovery itself
but how much the government will be able to accomplish in term
of infrastructure spending and reforms of the country.
 If the reform process goes well, then it will provide a new platform
for the economic progress down the road and will set Thailand to
another level.
 Risk factors going forward include (1) implementation risks, (2)
geopolitical risks, as well as (3) increasing volatilities in the global
economy and Emerging Markets as the US continues with the
normalization of its monetary policy.
3
Confidence level in Thailand has improved significantly
Consumer Confidence Index
Source: BOT
Business Confidence Index
4
However, the actual recovery is much weaker than expected
Growth in Q3
YoY:
+0.6%
QoQ: +1.1%
Growth in Q2
YoY:
+0.4%
QoQ: +1.1%
Source: NESDB
5
In particular, private consumption has rebounded sluggishly
Private Consumption Index
Source: BOT
6
The main constraint: high level of household debt
% of HH
with Debt
% of Debt/
HH Income
1st Decile
2nd Decile
3rd Decile
4th Decile
5th Decile
6th Decile
7th Decile
8th Decile
9th Decile
10th Decile
34.2
44.6
48.2
50.5
52.5
53.1
58.6
59.4
62.4
63.5
29.8
9.3
7.1
6.5
7.3
7.2
8.2
10.2
11.9
10.9
Average
52.7
10.1
7
As a result, Thailand is now entering a new phase of growth
The debt financed
growth by household
sector will come to a
close and will need
a new growth engine:
public and private
investment
Source: BOT
8
But private investment also recovered slowly with many
businesses waiting for the certainty of government projects
Private Investment Index
Source: BOT, BOI
9
On the other hand, tourism industry started to recover with
increasing arrival of Japanese, Chinese, Malaysian tourists.
Source: BOT
10
And export growth also improved across the board
Source: BOT
11
… with growth being driven by CLMV and US markets
Source: BOT
12
13
GDP forecast for 2015
NESDB for 2015
3.5-4.5%
BOT for 2015
4.0%
Source: BOT
Key challenges for the government
How can the government turn the improvement in sentiments into
the real recovery in economic activities?
 Additional short-term stimulus measures
 Early harvest in term of public investment projects
 Additional support for other key sectors – Tourism etc.
14
Proposed infrastructure investment projects
Development of water
transportation network
1
• Development of ports
• Improved efficiency of
water transportation and
maintenance of river banks
Improvement of
highway network
Development of
inter-city rail
network
• Improved equipment and
infrastructure
• Development of double-track
rail
2
• Improved access to
agricultural and tourism areas
• Network to link cities and
production bases
• Network for international
transportation
• Improved road facilities
to connect multi-channel
transportation systems
4
Enhancement of Thailand’s
air transport competitiveness
3
• Improved efficiency of airports
• Improved efficiency of air traffic to meet
international standards
• Increased efficiency of air fleet
• Establishment of aircraft industrial estates
• Construction of buildings for civil aviation
Development of
transportation in
Bangkok & its vicinity
5
• 10 electric train routes
• Buy 3,183 NGV buses and
improve parking places
• Development of road networks
and bridges in Bangkok and its
vicinity
15
Key risks going forward
Risk factors going forward include:
 Implementation risks
 Geopolitical risks
 Repercussions from the normalization of
US monetary policy to global financial
markets and emerging markets
16