Tourism, infrastructure to support Thailand's economy this year: BOT Governor

BY ORATHAI SRIRING AND SIMON WEBB

 

BANGKOK: -- Thailand's record tourist arrivals and public works spending are expected to offset weak domestic demand and global economic drag, keeping Southeast Asia's second-largest economy on course for 3.1 percent growth this year, the central bank governor told Reuters in an interview.

 

The trade-dependent economy has been hit hard by the deteriorating global economic environment and the slowdown in demand for exports, which the Bank of Thailand (BOT) expects to decline for the fourth consecutive year in 2016.

 

Tourism has been one of the few bright spots in the Thai economy, and government spending on big ticket infrastructure should give a jolt to the sluggish economy later in the year, BOT Governor Veerathai Santiprabhob said.

 

Full story: http://www.reuters.com/article/us-thailand-economy-cenbank-idUSKCN10I11W?il=0

 

-- © Copyright Reuters 2016-08-08

 

"Global economic drag" doesn't seem to be affecting neighbouring countries like Vietnam and Myanmar which have GDP's of 6.7% and 7.4% respectively against Thailand's wishful 3.1%.  Thailand's Consumer Confidence Index has dropped - 0.05.

 

In the meantime Thai exports (including rubber, plastics, computer parts and chemicals) continue the downhill slide as they have done for the last four years.

 

But there is hope according to the BoT -  tourism and infrastructure spending.

 

In theory tourism produces domestic and foreign income, additional tax, growth in domestic spending and more business opportunities.

 

On the other hand infrastructure spending traditionally produces employment, domestic consumption and large debt. The present deficit is 390 billion baht plus more in the form of submarines, tanks and railway lines and who knows what else. That debt has to be repaid with interest.

 

The country is in the hands of military style economists who find it easy to spend money to create growth. The problem is spending money on tanks and submarines does not create anything other than debt.

 

6 hours ago, webfact said:

Thailand's record tourist arrivals and public works spending are expected to offset weak domestic demand and global economic drag

It'll be a challenge for 60-70% of GDP contracting due to decreasing exports to be offset by tourism and government spending - both historically generating 10-30% GDP. As Putin did with Russia's foreign reserves, Prayut may need to use Thailand's foreign reserve to prop up the value of the baht, especially if BOT doesn't do a rate cut soon.