Sluggish domestic and external demand in the first half weighed on economic growth in Thailand, which was unexpectedly low at 4.1%. Private consumption decelerated after rising rapidly in 2012. Consumption last year was fueled by government payments and rebates and by household replacement purchases after severe flooding, but the stimulus from these outlays tapered off early this year. Fixed investment also pulled back from strong growth in 2012, when it was propelled by post-flood reconstruction.
|Selected Economic Indicators (%) - Thailand||2013||2014|
|ADO 2013||Update||ADO 2013||Update|
|Current Account Balance (share of GDP)||0.8||0.0||0.1||0.5|
Source: Asian Development Outlook (ADO) 2013 Update; ADB estimates.
Growth this year will be well below the Asian Development Outlook (ADO) 2013 forecast in April. Prospects for next year depend in large part on the government’s plans to raise public investment in water management projects and transport infrastructure. The ADO 2013 Update assumes that public investment accelerates in 2014, stimulating private investment. Growth in gross domestic product (GDP) is projected to increase slightly more than 1 percentage point next year from this year’s 3.8%. Lackluster domestic demand helped to keep inflation to a lower-than expected 2.5% in the first 8 months. Inflation forecasts are revised down from April. Low inflation and sluggish growth prompted the Bank of Thailand to reduce its policy interest rate in May, the fourth cut since late 2011.
Exports weakened in the first half, with declines seen in important categories including electronics, shrimp, and rice, the drop in rice exports stemming in part from high prices buoyed by the government’s ricesupport program. Although the trade and current account balances were in deficit, the balance of payments recorded a small surplus. The current account is seen moving back into a small surplus in 2014 on the back of a modest recovery in exports.
Source: ADB. 2013. Asian Development Outlook 2013 Update. Manila.