Thailand: Fragile expansion

12/12/2016 - Report
ic_blogtagThailandCountry RiskTrade

​Economic growth is improving but at a moderate pace and much below potential, in light of the +5.0% average yearly rate for 2000-2007. In 2016, economic growth has been supported by a rise in public investment, firm private consumption, and an increase in exports of goods and services. Private investment struggles to recover due to elevated political uncertainties and modest growth in domestic and external demand. 

Still, the economic outlook should prove resilient. A modest improvement in global demand and a low currency should help boost exports. One could expect more strong growth in public investment that should keep growth in a decent range.  Private consumption growth is set to remain firm benefiting from low inflation and a positive rise in personal income. Private investment will probably be the main drag due to continued political uncertainties related to the next elections. External risks stem from a global trade shock. If the US implemented severe protectionist measures or China’s demand were to weaken, Thailand would feel the pinch. Internal challenges include high household debt and a difficult political context.  ​

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