Asia country report Thailand 2019

Rapport pays

  • Thailand
  • General economic

28 mars 2019

Private consumption and public infrastructure investments sustain Thailand´s economic growth in 2019 and 2020, but high household debt remains an issue.

asia thai 2019 pic1asia thai 2019 pic3

Political Situation

General election in March 2019, but the military will remain in power

After several postponements, a general election will take place on March 24, 2019, officially ending the rule of the military government. However, regardless of the election outcome the military will probably continue to strongly influence or even dominate any new administration, either formally or behind the scenes. A new constitution passed in 2017 curbs the powers of populist politicians while preserving the military’s major political influence.

Political tensions could re-emerge ahead of and after the elections, potentially affecting international trade and investment. The simmering conflict arising from the deep political, social and economic division between the old establishment (army, judiciary and urban upper class) in the south and the rural poor in the north has yet to be resolved, and is unlikely to disappear soon.

Economic situation

Growth continues, but the high level of household debt is a serious issue    

Although relying heavily on tourism, merchandise exports and public investments for growth the Thai economy is rather diversified. The service sector accounts for about 55% of GDP, manufacturing for 27% and agriculture/fishing for 9%. The working population will start to decline in 2019, which could produce a significant drag on long-term growth.

asia thai 2019 pic4

Economic expansion is expected to slow down in 2019 and 2010 due to lower export growth, but to remain above 3% p.a., mainly sustained by private consumption and public infrastructure investments. It is expected that after the March 2019 elections any new government will proceed with large infrastructure projects and attract foreign investors with the establishment of a large special economic zone.

asia thai 2019 pic5

Despite increased public spending, government finances remain sustainable. Public debt remains below 50% of GDP and mostly domestically financed, which provides resilience against external shocks. The government tries to finance increased infrastructure spending with higher tax income.

The Thai banking sector is healthy, as banks are well capitalised. The Thai baht is subject to a managed floating exchange rate regime, which reduces volatility risks. However the high level of household debt (78% of GDP in 2018) remains an issue, although bank lending has grown at a slower pace since 2013. Due to low inflation and a large external surplus supporting the baht exchange there is plenty of scope for continued accommodative monetary policy. However, this could encourage businesses and households to borrow even more, resulting in greater financial stress when interest rates start to rise again. An unexpected rise of global interest rates could lead to problems, since Thai lenders finance an increasing share of their loans through wholesale funding.

 

 

Documents associés

Avertissement

Les informations figurant sur ce site sont uniquement fournies à titre indicatif et ne doivent pas être utilisées à d’autres fins que celles mentionnées. Nous vous remercions de bien vouloir vous reporter aux réglementations et accords en vigueur. Aucunes informations ne peuvent être considérées comme créant un droit, une obligation ou engageant la responsabilité d’Atradius y compris pour juger de la moralité d’un ou de plusieurs acheteurs. Si Atradius juge de la moralité d’un acheteur, elle le fait pour le compte de son arbitrage et en aucun cas au bénéfice de ses assurés ou toute autre personne. En aucun cas, Atradius, ses partenaires ou sociétés apparentées, agents ou employés, ne pourront être tenus responsables envers les lecteurs ou toute autre personne pour toute décision ou mesure prise sur la foi des informations contenues dans cette carte, ou pour tous dommages indirects, particuliers ou similaires, même si ces personnes ont été avisées de l’éventualité de tels préjudices.