FPO: 2018 GDP to fall short

FPO: 2018 GDP to fall short

Low exports blamed for missing target

Government is blaming anaemic export growth of under 8% as the reason it failed to achieve its planned GDP growth of 4.5% in 2018. (File photo)
Government is blaming anaemic export growth of under 8% as the reason it failed to achieve its planned GDP growth of 4.5% in 2018. (File photo)

Economic growth for Thailand was likely 4.1-4.2% last year, short of the Finance Ministry's target of 4.5% because of lower than expected exports, says the head of the Fiscal Policy Office (FPO).

To achieve the ministry's target, exports had to expand 8%, but last year's outbound merchandise shipments grew 6.7% after unexpectedly shrinking 1.7% year-on-year in December, said FPO director-general Lavaron Sangsnit.

The December decline was the third in 2018 after exports in September shrank 5.2% year-on-year and November at 0.95%. The contraction in December, a fall for a second straight month, suggested that the US-Sino trade dispute, which dragged China's 2018 growth to the lowest in nearly three decades, is taking a toll on economies in the mainland's supply chain.

The FPO initially predicted this year's growth at 4%, assuming exports grow 5%, he said. The lingering trade spat between the world's two economic titans is a headwind for the Thai economy this year, he said.

Even though the trade conflict dealt a blow to the supply chain of both countries over the past 1-2 months, prolonged tensions will prompt a relocation of production bases in Asia and Thailand could be the new investment destination, said Mr Lavaron.

As Thailand is not the first investment destination in Asean, the country must prepare to attract production investment, he said.

The Eastern Economic Corridor will be a magnet to draw investment, said Mr Lavaron.

Amid mounting uncertainties on the external front, private investment and consumption as well as state spending will be driving forces this year, he said.

The Finance Ministry will try to maintain economic growth momentum to prevent growth from dipping below 4% and measures will be necessary if the economy trends towards low GDP growth, said Mr Lavaron.

There is no need to implement new stimulus measures at the moment and the existing measures, particularly value-added tax refund for Chinese New Year's shopping, are expected to be sufficient, he said.

The Finance Ministry's think tank is keeping an eyes on the central bank's policy rate decision at Feb 6's meeting, said Mr Lavaron.

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