World Bank positive on growth
Pickup in exports set to buoy GDP in 2017
The World Bank has revised up its forecast for Thailand's economic growth by 0.1 percentage point to 3.2% next year in anticipation that exports will pick up due to the US economic recovery.
Despite the positive note, Thailand is still predicted by the Washington-based lender to be a laggard in Southeast Asia.
"We've raised the forecast mainly due to exports, which are expected to perform better on the back of a strong US economy in 2017," said Kiatipong Ariyapruchya, the World Bank's senior economist for Thailand.
Potentially faster US interest rate increases next year suggest the market is anticipating an improved US economy, which will come as a boon to Thailand's exports if that is the case, he said.
Thai merchandise exports have shown signs of recovery in recent months, supported by stronger global demand, Mr Kiatipong said.
He said the World Bank expects exports of goods and services to grow by 1% in 2017, up from 0.4% growth predicted for this year.
"But uncertainties regarding US trade policy resulting from President-elect Trump remain an issue," he said. "Also, other headwinds include uncertainties over global economic growth and the effects of Brexit."
The successful implementation of big-ticket public infrastructure projects will also cause a crowding-in for the private sector and brighten the economic outlook for Southeast Asia's second-largest economy after Indonesia.
"Even though we had revised up economic growth to 3.2%, the country will still expand at a slower pace than its neighbours, which are averaging 4-5%," Mr Kiatipong said.
Among the eight developing Asean countries -- Indonesia, Malaysia, the Philippines, Thailand, Vietnam, Cambodia, Laos and Myanmar -- Thailand is expected to achieve the smallest growth in 2017.
According to the World Bank, Myanmar is expected next year to grow at the fastest clip (8.4%), followed by Laos (7%), Cambodia (6.9%), the Philippines (6.9%), Vietnam (6.3%), Indonesia (5.3%) and Malaysia (4.5%).
Mr Kiatipong said one of the main factors that Thailand needs to look at is the development of the service sector as a way to increase economic growth and transform the country into an advanced economy.
He said the Thai service sector employs as much as 40% of the workforce but produces just 50% of the GDP, compared with the manufacturing sector, which employs 15% of the workforce but produces as much as 35% of the country's economic value.
Mr Kiatipong said the growth of the country's service sector also lags behind neighbouring countries such as Malaysia, owing to Thailand's restricted service market.
To increase productivity, liberalisation is needed to attract foreign experts, while improvements in connectivity between the service sector and other sectors are also a must, he said.
The World Bank projects Thailand's GDP to grow by 3.1% in 2016, lower than the Bank of Thailand's and the Finance Ministry's forecasts of 3.2% and 3.3%, respectively.