The Thai economy in 2015 grew by 2.2%, driven by exports and domestic consumption.

What are the main drivers of the Thai economy this year?

1. Industrial production is expected to rebound to 1.2% growth from the previous -0.4% contraction, particularly in the automotive and electronics sectors.
2. Exports are revised upwards from 2.3% to 5.5% per year, reflecting stronger-than-expected imports from major trading partners.
3. Private consumption continued to grow at 3.1%, as evidenced by the VAT collection in the country, which has expanded for nine consecutive quarters.

Private investment is clearly recovering – new projects exceed 1 trillion baht

– Private sector investment is expected to grow by 3.0% (from just 0.4%), reflecting confidence in production and exports.

– In the first half of the year, there were 1,880 projects requesting investment promotion, worth more than 1 trillion baht.

The government is moving forward with a budget of 157 billion baht.

– Government investment is expected to grow by 3.9% and government consumption by 1.2%.

– More than 115 billion baht has been allocated to infrastructure, tourism, community economy, and export impact mitigation plans.

Low inflation – current account surplus

– The general inflation rate this year is expected to be 0.4%.

– The current account balance is expected to register a surplus of US$14.6 billion, or 2.9% of GDP.

The United States is preparing to adjust import tariffs. Thailand may receive a 15-36% waiver.

– Thailand is likely to join the US Reciprocal Tariffs agreement in Q3 this year.

– It is expected that Thailand may receive a tax rate between 15%–36%, with a maximum ceiling unlikely to be exceeded.

– Special low-interest loans are being pushed to help SMEs exporting to the US.

The impact of the Thai-Cambodian border is ‘limited’.

– Border trade value with Cambodia accounts for only 1.4% of total trade.

– The main destinations for most foreign tourists are far from conflict areas.

The relief measures already issued include:

• Expanding the government reserve fund for border provinces
• Debt repayment suspension and low-interest loans through specialized banks
• Prepare a central budget of 25 billion baht to deal with the impact at the end of the year.

Issues to closely monitor in the second half of the year

• US import tariffs
• Products from countries that have moved their markets to Thailand
• US interest rate adjustments
• Geopolitical conflicts
• household debt
• Relocation of production bases from the country of origin

Source of information: Bangkok Business