Thailand: Economy

Recovery from a slump in 2014 when political unrest disrupted the economy, Thailand’s economic situation is unexpectedly tepid.

Selected economic indicators (%) 2015 2016
  ADO 2015 Update ADO 2015 Update
GDP Growth 3.6 2.7 4.1 3.8
Inflation 0.2 -0.7 2.0 1.5
Current Account Balance (share of GDP) 4.0 5.0 1.5 2.0

Source: Asian Development Outlook 2015; Asian Development Outlook 2015 Update

Economic performance

Government expenditure in Thailand rebounded in the first half of 2015, but private consumption recorded feeble growth, and private fixed investment was flat. Private consumption is constrained by falls in farm incomes, slowing growth in wages, and high household debt.

Consumer confidence declined through July. Private investment is subdued because of lackluster prospects for exports, soft consumption spending, and spare industrial capacity. Gross domestic Product (GDP) grew by a modest 2.9% in the first half.

The consumer price index fell by 0.9% in the first 8 months and is now expected to decline slightly for the full year. Core inflation has remained positive.

A higher trade surplus in the first 6 months stemmed from a sharper fall in merchandise imports (down by 8.7% in US dollar terms) than the fall in exports by 4.9%. The trade surplus combined with stronger income from tourism to more than double the current account surplus for the same period in 2014.

Economic prospects

The government is taking steps to assist rural areas hit by drought and low prices for farm products and in September it unveiled a stimulus package for small- and medium-sized businesses. Such fiscal measures, together with planned large infrastructure projects and improved prospects for exports to major industrial economies next year, are seen lifting GDP growth in 2016 by just over 1 percentage point from 2015.

Nevertheless, growth in both years will undershoot earlier projections, and forecasts are revised down.

For 2016, prices are seen turning up with inflation projected at 1.5%, this forecast trimmed from March. Current account surpluses this year and next will be above those forecast in the Asian Development Outlook 2015.

Excerpted from the Asian Development Outlook 2015 Update.