Post-election uncertainties see World Bank downgrade GDP further
Private investment and household consumption continued to grow close to their three-year high, helped by low inflation, increasing employment and rising recurrent fiscal spending. At the same time, public investment weakened as the implementation of “megaprojects” slowed due to election-related delays.
As a result, the economy’s pace of expansion slowed to 2.8% in the first quarter of 2019, falling below 3% for the first time since mid 2015.
The World Bank projects growth to gradually increase from the expected 3.5% in 2019 to 3.6 and 3.7 in 2020 and 2021, assuming private consumption can be sustained and public investment accelerates.
“Policy continuity and the implementation of planned public infrastructure projects in the Eastern Economic Corridor will be of vital importance to sustain growth,” said Birgit Hansl, World Bank country manager for Thailand.
“Increased regional integration and making better use of Thailand’s strategic location could support trade in goods and services.”
Prolonged political uncertainty is a key risk for Thailand’s economic outlook. Lingering doubts about the cohesiveness of the newly established 19-party coalition government could adversely impact investor and consumer confidence and contribute to a further delay in the timely implementation of large infrastructure projects.
Today, 82% of Thai adults have a formal bank account and the gender gap is small. However, the report finds that challenges remain in the quality of digital financial services, as well as in access to broadband services.
“Expansion of digital services to the underserved would bring about new economic opportunities and support a reduction of inequality as envisaged in Thailand’s national strategy,” said Kiatipong Ariyapruchya, World Bank senior economist for Thailand.
“As fintech activities continue to grow in Thailand, inter-governmental collaboration and building a supportive environment for a sound fintech ecosystem would be important.”
Kiatipong Ariyapruchya, World Bank senior economist for Thailand
ORIGINAL SOURCE: The Nation
