After the rebound in 2012, economic growth is expected to moderate
to about 5% this year and next (Figure 3.30.6), the pace seen in the
3 years leading up to the global financial crisis. Projections a...
government follows through with large public investments it plans in water
management and transport infrastructure during the forecast period.
Private consumption will continue to benefit from a tight labor market
and the minimum wage increases, which were extended throughout
the country from January 2013. A study by the Thailand Development
Research Institute found that last year’s 40% increase in minimum wages
in seven provinces did not cause significant layoffs.
Despite concerns that the rice price subsidies may not be the most
cost-effective option for raising rural incomes, the government extended
the rice-purchase program into 2013. However, the impact of flood-relief
payments and low-interest loans offered in 2011 will fade during 2013 and
beyond. The tax break for first-time house buyers is scheduled to end in
May 2013, while the incentive for first-time car buyers expired at the end
of 2012. While consumer confidence rose in February to its highest level
in 18 months (Figure 3.30.7), growth in private consumption is unlikely to
match that in 2012.
Growth in private investment will also moderate as post-flood
reconstruction winds down, though investment is likely to remain robust.
Cement sales were strong early this year, suggesting that construction
remains buoyant. The Board of Investments approved investment
incentives for 2,262 planned projects valued at $330 million in 2012,
double the value of the previous year. Business sentiment generally was
high early in 2013 (Figure 3.30.7) and lending rates relatively low.
Government investment is expected to contribute more to economic
growth, with public investment projected to rise by 12.5% this year.
The water management program should gather momentum from the
second half of 2013, with $1.3 billion projected to be spent this year.
The government plans legislation under which it can borrow the
equivalent of $67 billion off-budget over 7 years to invest in transport
infrastructure: roads, railways, seaports, and airports. Investment in this
program could start early next year. The fiscal deficit, including budget
and off-budget spending, is projected to widen to 4.8% of GDP in FY2013.
Early in 2013 the central bank noted positive signs for continued
economic growth, pointing to increases in indexes of consumption and
investment, buoyant tourism, and an uptrend in exports in January.
Sources: Center for Economic and Business Forecasting;
Bank of Thailand. http://www.bot.or.th (both accessed 11 March 2013).
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