BANGKOK – New economic data out this week says the Thai economy is recovering after political upheaval disrupted business activity, hurt investment, and depressed consumer confidence. The bank says the economy stalled in the first half of this year, but should return to growth next year.
The World Bank says Thailand’s economy will expand only 1.5 percent in 2014, after protest and violence early in the year discouraged visitors who drive one-tenth of the nation’s economy.
The temporary lack of a functioning government hampered public investment.
But the bank says a return to relative stability is helping growth in the second half of this year. Experts predict the Thai economy will grow at a 3.5 percent rate in 2015, as exports, private and public investment gradually recover.
World Bank country economist, Kirida Bhaopichitr, says Thai export growth remains sluggish, especially in key markets such Japan and the United States.
She also says high household debt and poor consumer confidence are hurting the Thai economy.
“Domestic demand and also the external front with exports — there are challenges on both sides. Consumers are still not sure what their future incomes will be, given that the domestic economy is not doing too well. And also on the export front there’s still a lot of uncertainties. So they are not sure what their future incomes will be so they might be more cautious in increasing their spending,” she said.
The Bank’s economists say a boost may come from a $10 billion economic stimulus package, including one time subsidy payments to low income rice farmers.
But Thai Government officials are already warning of possible severe drought conditions in the key rice growing areas going into the upcoming dry season after lower than expected rainfall during the current monsoon.
On Tuesday, the Tourism Department reported a 10 percent fall in tourist arrivals in the first nine months of 2014, to around 17 and a half million visitors, with the sharpest declines from East Asia visitors especially from Japan.
Economists say the country should boost the competitiveness of its exports, improve workforce skills and rural education, while addressing social inequality.
The military led government recently announced plans to implement a property tax as well as measures to reduce energy consumption.
Thailand’s growth outlook is the weakest in the region with East Asia’s forecast growth at close to 7.0 percent through this year and into 2015. China’s growth is marked down slightly to 7.2 percent next year.
The bank says regional economies – China, Malaysia, Vietnam and Cambodia — are all well placed to boost exports, while domestic spending in Indonesia in 2015 will lift its economic outlook. In Myanmar, foreign investor interest is set to lift growth to 8.5 percent.