Thailand: Economy

In Thailand, cautious economic recovery that started in 2014 is expected to gather momentum slowly, nudged forward by higher investment and abetted by a calmer political environment, better prospects for some exports markets, and lower fuel costs. Consumer prices will barely change this year before edging up in 2016. Stronger public investment depends heavily on state-owned enterprises, which need reform.

Selected Economic Indicators (%) - Thailand 2015 2016
GDP Growth 3.6 4.1
Inflation 0.2 2.0
Current Account Balance (share of GDP) 4.0 1.5

Source: ADB estimates.

Economic performance

A contraction in Thailand’s gross domestic product (GDP) in the first quarter of 2014 was followed by a cautious recovery sufficient for the economy to post marginal growth of 0.7% for the year. Political unrest and street protests disrupted economic activity into the first half of 2014, culminating in a military takeover of the government in May. Various disruptions since 2007 have confined average growth over this period to 2.9%.

Economic prospects

The economy is expected to benefit this year from a relatively calm political environment, the restoration of government investment, better prospects for exports to the major industrial economies, and lower fuel costs for businesses and consumers. These factors are forecast to lift GDP growth to 3.6% in 2015 and 4.1% next year.

In particular, public fixed investment will rise in 2015 after last year’s decline and is expected to accelerate in 2016. The interim government has approved an infrastructure program that includes $95 billion in investments over 8 years in railways, roads, ports, airports, and special economic zones. This year, public investment will be confined to relatively small projects, with larger-scale construction to start from next year. The government plans to offer contracts for mass rapid transit rail lines in Bangkok and for double-tracking rail lines across the country.

Excerpted from the Asian Development Outlook 2015.