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Country Economic Review: Thailand : II. Short and Medium-Term Economic Prospects and Policy Issues
B. Growth, Investment, and Savings
39. Although the economic recovery was sustained much of its momentum in 2000, overall
growth is expected to slow in 2001. In the first half of 2001, the GDP growth rate was only 1.9
percent year-on-year, down from 5.9 percent in the first half of 2000. Based on ADB staff
estimates, GDP growth is projected to slow to 1.5 percent in 2001, due to a deteriorating
external environment and sluggish domestic demand (Table13).20 However, economic
momentum is expected to strengthen in 2002 with growth rates ranging from 2.5 to 3.0 percent,
provided that external conditions improve and that fiscal stimulus planned by the new
administration is effectively implemented. Prospects for growth will also remain highly
dependent on continued progress in financial sector reform and corporate debt restructuring.
Both are much needed to improve efficiency and profitability, and to boost investor confidence.
| Table 13: Key Economic Indicators and Projections |
|---|
| Item |
1998 |
1999 |
2000a |
2001 |
2002 |
|---|
| Output and Growth (constant 1988 prices, %) | |
| GDP Growth |
(10.8) |
4.2 |
4.4 |
1.5 |
2.5 |
| Agriculture |
(3.2) |
2.7 |
2.7 |
1.0 |
1.5 |
| Industry |
(13.3) |
9.5 |
5.1 |
1.7 |
3.0 |
| Services |
(10.0) |
(0.1) |
4.1 |
1.5 |
2.2 |
| Saving and Investment (current prices, % of GDP) | |
| Gross Saving |
33.2 |
29.9 |
30.2 |
25.8 |
23.3 |
| Gross Domestic Investment |
20.5 |
19.9 |
22.7 |
22.0 |
21.0 |
| Government Finance (% of GDP)b | |
| Revenue and Grants |
16.2 |
16.2 |
16.5 |
15.8 |
15.4 |
| Expenditure and Net Lending |
23.8 |
27.4 |
19.6 |
17.9 |
19.1 |
| Fiscal Balance |
(7.6) |
(11.2) |
(3.2) |
(2.0) |
(3.7) |
| Money and Inflation (annual % change) | |
| Money Supply (M2) |
9.5 |
2.1 |
3.7 |
4.0 |
6.5 |
| Private Sector Creditc |
(7.9) |
(5.7) |
(8.4) |
(4.0) |
(1.0) |
| Consumer Price Index |
8.1 |
0.3 |
1.6 |
2.3 |
2.6 |
| Balance of Payments | |
| Merchandise Trade Balance (% of GDP) |
10.9 |
7.5 |
4.5 |
1.6 |
1.1 |
| Exports, FOB (% of GDP) |
47.4 |
46.5 |
55.7 |
58.0 |
58.1 |
| Imports, CIF (% of GDP) |
36.4 |
38.9 |
51.2 |
56.4 |
57.0 |
| Current Account Balance (% of GDP) |
12.7 |
10.0 |
7.5 |
3.8 |
2.3 |
| Exports, FOB ($ term, annual growth rate, %) |
(6.8) |
7.4 |
19.6 |
(4.5) |
4.0 |
| Imports, CIF ($ term, annual growth rate, %) |
(33.8) |
16.9 |
31.3 |
1.0 |
5.0 |
| External Payments Indicators | |
| Gross Official Reserves ($ billion) |
29.5 |
34.8 |
32.7 |
29.5 |
27.2 |
| (months of imports of goods)d |
8.7 |
8.8 |
6.3 |
5.6 |
4.9 |
| External Debt Service (% of exports of goods and services)d |
21.4 |
19.4 |
15.4 |
17.0 |
14.6 |
| External Debt (% of GDP) |
93.8 |
78.3 |
65.8 |
61.5 |
53.1 |
| Memorandum Items | |
| GDP (current prices, B billion) |
4,628 |
4,615 |
4,900 |
5,087 |
5,346 |
| Average Exchange Rate (B/$) |
41.31 |
37.79 |
40.16 |
45.50 |
46.00 |
| GDP (current prices, $ billion) |
112.1 |
122.1 |
121.8 |
111.8 |
116.2 |
| Per Capita GDP (current prices, $) |
1,831 |
1,976 |
1,955 |
1,780 |
1,836 |
| Average Population (million) |
61.2 |
61.8 |
62.3 |
62.8 |
63.3 |
| Annual Population Growth (%) |
1.2 |
1.0 |
0.8 |
0.8 |
0.8 |
(-) Indicates negative value.
CIF = cost, insurance, and freight.
FOB = free on board.
GDP = gross domestic product.
Note: GDP and GDP ratios are preliminary estimates based on quarterly data.
a Preliminary estimates.
b On a fiscal year basis. Covers central Government only. Based on Government official targets.
c Includes claims on business and household sectors and other financial institutions.
d Data on exports of goods and services and imports of goods in the BOP table were used.
Sources: National Economic and Social Development Board, Bank of Thailand, Ministry of Finance and ADB staff estimates. |
40. As the growth of domestic and external demand is likely to slow in 2001, the investment
rate is unlikely to pick up, despite the expected fiscal stimulus package, and no radical
departure from current saving ratio is expected. This will lead to a lower resource gap between
investment and saving to around 4 percent in 2001, down from 7.5 percent in 2000.
_______________________________________
- The macroeconomic projections in this section are essentially based on a macroeconomic consistency framework
used by IMF and based on expected slowing of global GDP growth of 2.6 percent in 2001 followed by a rebound to
about 3.5 percent in 2002.
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