FPO warns 4% growth this year will be difficult

FPO warns 4% growth this year will be difficult

The government's ambitious goal of 4% economic growth this year will be difficult, requiring a lot of effort and a host of supporting factors such as higher exports, recovering foreign tourist arrivals and active private investment, says the Finance Ministry's Fiscal Policy Office (FPO).

FPO adviser Wuttipong Jittungsakul said if the government hopes to achieve the 4% figure, exports have to expand by more than 6.2%, international arrivals should exceed 5 million and private investment has to expand by more than 3.4%.

The FPO forecast economic growth at 2.8% this year, compared with a 6.5% contraction in 2020.

Mr Wuttipong said the economy in February showed signs of a gradual recovery in line with higher private investment, as reflected by an expansion of capital goods imports by 18.6% year-on-year and 4% growth of exports excluding gold.

However, overall exports in February contracted by 2.59% to US$20.2 billion year-on-year, due largely to a drop in industrial products and gold shipments.

In the first two months this year, export value contracted by 1.16% to $39.9 billion.

He said overall consumer and industry sentiment recovered in February, as the consumer confidence index rose to 49.4 (from 47.8 in January) and the Thailand Industry Sentiment Index increased to 85.1 (from 83.5 points in January), following the easing of the second wave of Covid-19 infections and the government vaccination rollout.

The government's consumption stimulus packages also play a vital part in bumping up consumer spending, said Mr Wuttipong.

Finance Minister Arkhom Termpittayapaisith said the 4% growth goal remains attainable as the country has started its tourism sandbox scheme for foreign tourists in Phuket and Koh Samui.

The government's mass vaccination campaign should cover much of the country by year-end, he said.

Mr Wuttipong warned escalating violence in Myanmar was starting to take a toll on Thai exports, with lower shipments to Cambodia, Laos, Myanmar and Vietnam in February down 4.2% year-on-year.

Exports to Myanmar fell 29.5%, with those to Laos down 8.5%, and Cambodia down 10.6%. Only shipments to Vietnam rose 6.2% in February.

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