Firms hopeful about GDP

Firms hopeful about GDP

Predictions hinge on second-quarter results

A woman walks past a construction site of the Green Line, one of several public transport projects likely to affect economic growth. (Photo by Patipat Janthong)
A woman walks past a construction site of the Green Line, one of several public transport projects likely to affect economic growth. (Photo by Patipat Janthong)

The business sector is more upbeat about the country's economy, saying growth could hit the upper end of the forecast band at 4.5% this year, as they await the second-quarter economic reading before reviewing the growth estimate.

GDP for the remaining quarters of this year should expand at a slower pace than the first quarter's rate of 4.8% year-on-year growth, but not below 4%, said Predee Daochai, chairman of the Thai Bankers Association.

The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) said at its April meeting it would raise its 2018 economic growth forecast to a range of 4-4.5% from 3.8-4.5% after the country's growth tallied the fastest pace in five years in the first quarter.

The National Economic and Social Development Board (NESDB) has raised its economic growth forecast this year to 4.2-4.7% from 3.6-4.6% projected in February. The NESDB has also increased its export growth forecast to 8.9% this year from an earlier estimate of 6.8%.

Mr Predee said the committee maintains the current projection for 2018 export growth in the range of 5-8%, and inflation at 0.7-1.2%.

If Thailand's economic momentum is shown to have continued into the second quarter, the country's GDP growth could exceed JSCCIB's target range, he said.

The positive economic outlook would support the banking industry's loan expansion, particularly in corporate loans, in accordance with improving private investment.

Loan demand for small and medium-sized enterprises (SMEs), and individuals has also accelerated.

With robust economic growth, the committee expects that SMEs' debt-servicing ability will improve and bank loan quality will rise, he said.

Separately, the private sector committee will employ the University of the Thai Chamber Commerce to study the impact of the new international financial standard, International Financial Reporting Standard 9 (IFRS9) on SMEs.

The study is expected to take one month to complete and the committee will consider the study's outcome at its next meeting in July.

Mr Predee, who is also president at Kasikornbank (KBank), said despite the stronger-than-targeted economic growth in the January-March quarter, the bank still maintained its 2018 loan growth target in the range of 5-7%. The bank delivered 2.6% loan growth for the first five months of this year.

Higher loan growth will be a boon to the bank's interest income amid lower non-interest income after banks waived fees for internet and mobile banking transactions.

KBank, the country's third-largest lender by assets, maintains its current target of net interest margin at 3.2-3.4% this year.

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