Issue 11: 1 Sept 2014

Driven by an increase in exports, Thailand’s economy has rebounded from the malaise it endured during the first half of 2014.

Thailand’s economy has rebounded and will see a significant growth in the latter half of 2014.

When Thailand announced that exports for June rose 3.9% compared to the same month last year, it was the sign the business world had been looking for; that the country’s economy was starting to rebound. The positive economic news was doubled when the government announced that Southeast Asia's second-largest economy had avoided recession in Q2 by growing 0.9% compared with the previous quarter.

This marked a significant volte face for the country’s economy that had previously been staring recession in the face following the political transformation in the first few months of the year.

Now the government is predicting a V-shaped rebound by December, based on rising consumer and business confidence and political stability, with a projected 4% growth in the second half of the year after a 0.1% contraction in the first.

Already, the government has fast-tracked payments of 92 billion baht (US$2.9 billion) owed to rice farmers, dispersed funds from last year’s budget and given the go ahead to a range of infrastructure projects which will inject, eventually, at least two trillion baht (US$62.8 billion) into the economy. These rail and road links will have the added benefit of improving logistics and efficiency for exporters, farmers and retailers.

While the improvement in exports and stimulus provided by the infrastructure projects has seen economists start to lift their targets for this year and forecast significantly better numbers for 2015, business groups have also been buoyed by recent
developments. The Board of Investment (BOI) recently approved a backlog of 15 projects worth around 51.5 billion baht (US$1.6 billion).

Now, exports appear to be solidly picking up, the Bank of Thailand has lifted its growth forecast for next year to 5.5% from 4.8%. And Kasikorn Bank has lifted its projections for 2014 to 2.3%, up from its previous forecast of 1.8%.Consumer confidence is lifting, rising for the third consecutive month according to the index of the University of the Thai Chamber of Commerce which rose from, 75.1 in June to 78.2 in July, the highest level since August 2013.

“Consumer confidence picked up due to the stable political situation,” Thanavath Phonvichai, an economics professor at the university, said. “It is expected to improve steadily, with consumption the key economic driver in the second half [of 2014].”

And on August 15, finally some good news for the nation’s critical tourist sector that contributes as much as 9% to Thailand’s GDP. After falling year on year by as much as 6% for the first half of the year, July saw a surge in numbers by 22%.

Words by Michael Sainsbury