K-Research ups GDP growth view to 3.3%

K-Research ups GDP growth view to 3.3%

Public spending, tourism give boost

The research arm of Kasikornbank is the latest body to revise its economic forecast for 2016 after first-half growth beat expectations.
The research arm of Kasikornbank is the latest body to revise its economic forecast for 2016 after first-half growth beat expectations.

Kasikorn Research Center (K-Research) has raised its forecast for 2016 economic growth to 3.3% from 3% previously on anticipation that the recovery momentum will continue into the second half.

The upwardly revised GDP forecast is based on assumptions that economic growth will come in at 3.4% in the third quarter before lowering to 3.2% in the final quarter because of a high-base effect, said K-Research deputy managing director Pimonwan Mahujchariyawong.

The brighter prospects are due to state spending and robust tourism, she said.

With the better-than-expected growth in the first half, policymakers and research houses have jumped on the bandwagon to raise growth forecasts for this year.

The Bank of Thailand this month raised its forecast for GDP growth to 3.2% from its previous prediction of 3.1%, while the Asian Development Bank on Tuesday revised up its forecast to 3.2% from 3%.

The economy unexpectedly grew 3.3% in the first three months to March before accelerating to 3.5% in the second quarter, putting first-half growth at 3.4%.

K-Research maintained its public investment growth estimate at 11.5% this year, but slashed private investment growth to 1.3% from 2.3%. The research arm of Kasikornbank also cut investment growth to 3.8% this year from 4.3% earlier predicted.

The research house estimated foreign tourists at 33 million this year, up 10.4% from last year.

The government's clampdown on zero-dollar tours would affect around 300,000 Chinese tourists but its effect on tourism revenue and economic growth would be marginal this year.

"The zero-dollar tour management will shave 3.8 billion baht, or around 0.1% of GDP, off tourism income, so its impact on the country's overall tourism will not be significant," Mrs Pimonwan said.

Given the pickup in commodity and farm prices, and the government's stimulus measures, K-Research raised its forecast for private consumption growth to 2.7% in 2016 from 2.1% earlier projected.

It increased its government consumption growth estimate to 3.6% this year from 3.3%, in wake of the rising mid-year fiscal budget.

In the revised projections, exports are expected to fall by 1.8% this year, lower than the previous forecast of a 2% contraction.

K-Research predicted exports will pick up to 0.8% growth next year following signs of improvement in August.

But the country's merchandise shipment value to Cambodia, Laos, Myanmar and Vietnam fell by 4.3% in the first seven months, while that to Malaysia shot up 24.8%. Exports to emerging markets also improved.

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