Thai Economy Gets Government Spending Boost While Exports Falter

  • 2016 growth estimate cut to 2.8%-3.8% on weaker exports
  • Full-year growth accelerated in 2015, 4Q growth eased

Thailand’s economy grew more than analysts estimated in the fourth quarter as the military government’s series of stimulus measures started to bear fruit, countering a slowdown in exports.

Gross domestic product expanded 2.8 percent in the three months through December from a year earlier, the National Economic and Social Development Board said in Bangkok Monday. That compares with the 2.6 percent median estimate in a Bloomberg News survey of 22 analysts. GDP climbed 2.8 percent in 2015, more than the median forecast of 2.7 percent in a separate survey.

Prime Minister Prayuth Chan-Ocha has accelerated budget spending to help everyone from farmers to small businesses, in an effort to boost local demand amid falling exports. Bank of Thailand Governor Veerathai Santiprabhob said last week monetary policy remains accommodative to assist the recovery. The central bank on Feb. 3 kept its policy interest rate unchanged for a sixth straight meeting.

“While fiscal spending should help prop up the economy in 2016, the pace of the recovery will be gradual, given the backdrop of continued political uncertainty and high household debt,” Krystal Tan, a Singapore-based economist at Capital Economics, said in a note after the data. “Meanwhile, lacklustre external demand and declining competitiveness will weigh on goods exports.”

The baht slipped 0.2 percent to 35.67 against the dollar as of 10:43 a.m. in Bangkok. The benchmark SET Index of stocks rose 0.8 percent after the report.

Forecast Cut

The National Economic and Social Development Board cut its 2016 GDP growth estimate to a range of 2.8 percent to 3.8 percent from 3 percent to 4 percent on weaker exports.

"The government has prepared measures earlier to counter the global slowdown by trying to support local spending," Porametee Vimolsiri, secretary-general of the state planning agency, said in a briefing in Bangkok Monday. "Money from existing government stimulus and budget spending should be enough to boost the economy to the median of our current forecast at 3.3 percent."

The government has planned 470 billion baht ($13 billion) of stimulus measures from September 2015 to January, Porametee said. This excludes 50 billion baht of additional spending from the central budget, for which the government will seek parliamentary approval soon, he said.

A weak baht will also support exporters’ revenue, while lower oil prices and tourism will aid the economic recovery, Porametee said. The state planning agency forecasts 32.5 million tourist arrivals this year, up 8.8 percent from last year. Tourism revenue is forecast to rise 9.8 percent to 1.65 trillion baht.

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