Economic Analysis - Business Environment Reforms To Support Productivity Growth - FEB 2018


BMI View: We maintain our relatively positive view on Thailand ' s real GDP growth outlook over the coming years, in spite of the risks posed by the return to elections in 2018. We forecast the Thai economy to grow by an average of 3.5% over the next five years as the country ' s new constitution should provide policy continuity regardless of the election outcome, and continued business environment improvements, potentially including big-bang SOE reform s , boost productivity.

Thai real GDP expanded by an impressive 4.3% y-o-y in Q317, bringing growth for the first nine months of the year to 3.8%. The slight decline in the Bank of Thailand's leading indicator index over the past two months indicate that a slight slowdown is likely in Q417, but nonetheless we are revising up our forecast for 2017 real GDP growth to 3.6% from 3.4% currently. As for 2018, we are maintaining our real GDP growth forecast at 3.4%, which suggests a slight slowdown, due in part to the risks posed by the election that is tentatively scheduled for November 2018, as well as the impact of deteriorating terms of trade as the heavily energy-reliant export sector faces a headwind from rising oil prices.

That said, we maintain our forecast for Thailand to grow by an average of 3.5% over the next five years as the country's new constitution should provide policy continuity regardless of the election outcome, and continued business environment improvements, potentially including big-bang SOE reform, boost productivity. Considering that Thailand's active population is set to decline gradually over the coming years, productivity gains will be increasingly important in driving headline real GDP growth.

Investment And Net Exports The Major Contributors
Thailand - Real GDP Growth By Expenditure, Percentage Point Contribution
Source: BMI, BoT

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