High spirits: Tourists pose for pictures on Mai Khao Beach as a plane flies into Phuket International Airport. The finance ministry is confident that firm domestic demand and an improving services sector will keep Thailand’s recovery on track. — AFP
BANGKOK: A slew of billion-dollar infrastructure projects and an upswing in tourism will fuel Thailand’s expansion this year, shielding the economy from weaker exports and any possible delay in budget approval due to elections, Finance Minister Arkhom Termpittayapaisith says.
Government approvals for three projects at a combined investment of about 524 billion baht (RM66.7bil) will ensure capital spending remains on track, Arkhom said Monday, citing a high-speed railway line connecting three airports, an expansion of an airport southeast of Bangkok and a deep seaport.
He also said that private sector investment was improving, with rising imports of machinery and equipment.
The finance ministry is sticking to its forecast for a gross domestic product expansion of 3.8% this year, even though a below-par performance in the last quarter needs to be factored in, Arkhom said.
Firm domestic demand and an improving services sector will also keep the recovery on track, he added.
Thailand posted the slowest growth rate among South-East Asia’s major economies last year and now faces the risk of a delay in parliament passing the 3.35 trillion baht (RM428.570mil) budget for the next financial year, with elections tentatively slated for May.
Any delay in forming a government and passing a budget, similar to the previous election year in 2019, when growth was cut in half to 2.1% from a year earlier, may slow major state spending and harm the recovery.
“We are quite comfortable in our growth path despite many people saying that we have the lowest rate in the Asean region,” Arkhom said in Bangkok.
“Tourism has been helping the Thai economy a lot, particularly in the short-term recovery. We expect more improvement in the tourism sector after the Chinese reopening.”
Foreign tourists are returning to Thailand in droves, with arrivals topping two million for a second straight month in January.
The recovery is expected to gain speed with China, the country’s biggest source of visitors before the pandemic, allowing outbound group tours earlier this month.
While tourism will support private consumption, a slowdown in Thailand’s major trade partners is seen as a headwind, Arkhom said.
A sustained expansionary financial policy and gradual normalisation of interest rates will ensure the recovery remains intact, he said.
The Bank of Thailand (BoT) has been one of the most dovish central banks in the region, increasing its benchmark rate by only 100 basis points since August.
The BoT’s monetary policy committee (MPC) had said that a gradual and measured normalisation was needed to nurse the economic recovery.
The finance ministry and the central bank agree on the need for a coordinated response to ensure the economy recovers fully, Arkhom said, adding that “you wouldn’t see the MPC being aggressive in raising the rates”.
Headline inflation may ease to a range of 3% to 4% later this year from a 14-year high of 7.86% in August as global energy and commodity prices ease and amid continued government subsidies on electricity, cooking gas and diesel prices for targeted groups, Arkhom said. — Bloomberg
