Thailand’s economy seen to register 4% growth in 2015

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BangkokThe Asian Development Bank (ADB) projects Thailand to record an economic growth of 1% in 2014 and 4% next year, saying restored confidence, increased government spending, and expected improvement of major industrial economies will be drivers of growth in the coming year.

The forecast for 2014 is lower than the 1.4% to 1.5% previously expected, while growth in 2015 is lower than the 4.5% forecast in September.

The country’s economic growth had fluctuated in recent years as the country weathered the global financial crisis, severe floods, and domestic political tensions.

But ADB president Takehiko Nakao said Thailand’s broad economic outlook was encouraging heading into 2015. “Due to Thailand’s strategic location in the GMS [Greater Mekong Subregion), broad industrial base and rich natural resources for agribusiness and tourism, it has the potential to reach high-income status through continued reform efforts and appropriate policies,” said Nakao, adding that “Thailand’s economic performance is also crucial to the prospects of GMS countries.”

Nakao highlighted remaining challenges to strong and inclusive growth. The education sector requires further reform to promote research and development and to supply the labor market with a high-quality and skilled workforce. He also stressed the importance of promoting good governance, including improving transparency and efficiency of state-owned enterprises, and measures against corruption. Social protection including the pension system should be strengthened to address growing inequality and to better serve a population that is among the fastest aging in Southeast Asia.

Continued strong foreign direct investment and improved infrastructure are also essential for Thailand to realize its economic potential, he added. Key areas to look into include infrastructure development, water resource management, education reform, financial inclusion and literacy, renewable energy, and energy efficiency.

Relatedly, a study by the University of the Thai Chamber of Commerce (UTCC) forecasts the Thailand economy to post 4% growth next year from 0.8% this year, with the medical and beauty industries being the strongest growth areas.

The study showed that many medical and beauty clinics in Thailand had made forays into neighbouring countries, foreseeing that people were more concerned with health and beauty, according to a report by Malaysia’s national news agency Bernama.

“Ageing people accounted for over 10 per cent of Thailand’s population and this would help the wellness and medical services to grow. Other sectors in the top ten growth areas are cosmetics, telecommunications, coffee shops, fresh water fishery and big bike distribution,” UTCC said in a statement.

UTCC said the factors that would contribute to the growth of businesses include increased incomes, economic growth, the ASEAN market and cross-border trade, government’s investment in infrastructure, fourth-generation development, and low interest rates.

“The risks to growth include political instability, uncertainty over global economic recovery, volatility in exchange rates, high public debt, high production cost as well as natural disasters,” it said.

Photo: Swaminathan Gurgaon