NADI, Fiji: The global economic slowdown is expected to hamper Thailand's GDP expansion from this year to 2020, with the slump in world export demand affecting the country more than some neighbours, says Asian Development Bank's (ADB) chief economist.
The lender is keen to support the Mass Rapid Transit Authority of Thailand's (MRTA) urban transport projects, namely the MRT's Purple Line.
"Developing Asian countries' growth will be moderate at 5.7% this year and 5.6% next year, mainly stemming from the slowdown of the global economy and partly explained by ongoing US-China trade tension," Yasuyuki Sawada, ADB's chief economist, said at the bank's annual meeting that kicked off May 1.
The five-day event is being held in Nadi, Fiji, which became the first Pacific country to host the annual event this year with over 2,000 participants and 200 journalists.
Looking at Southeast Asia, Mr Sawada said Indonesia has strong domestic demand as well as fiscal policies offsetting the negative impact from the global economic slowdown.
Indonesian exports to the US have replaced those from China and foreign direct investment from China is flowing into Indonesia because of the trade war.
The increase in exports to the US and Chinese investment can also be observed in Vietnam, Thailand, Laos and Singapore, but the impact of the global slowdown "seems to be slightly dominant" in these countries, he said.
In comparison with Indonesia and Malaysia, expected to grow from 5.2% this year to 5.3% next year and 4.5% to 4.7%, respectively, Thailand's economy is expected to contract from 3.9% in 2019 to 3.7% 2020. Vietnam will go from 6.8% to 6.7% in the same period.
Mr Sawada did not blame the ongoing political situation in Thailand for its projected GDP contraction between 2019 and 2020, and said if current economic policies remain in place after the election then it will be business as usual.
"If there are basically the same economic and investment policies then economic growth will continue and based on this baseline scenario, we make the growth assessment," he said. "So far, we don't see any deviation from our baseline."
As for the trade war, Mr Sawada said because the situation changes almost daily, it is difficult to predict the next step. If the current tariffs between the US and China remain intact for 2-3 years it will contribute to the likely slowdown of the Chinese economy by 0.1% per year.
For a worst-case scenario where all trade between the US and China is under tariffs, then the Chinese economy could contract by up to 0.3% per year.
"This is quite negative, but even with the worse-case scenario, the magnitude seems to be rather limited," he said.
As for ADB's support for transport infrastructure projects in Thailand, Ramesh Subramaniam, the bank's director-general for Southeast Asia, told the Bangkok Post it is backing the GMS East-West Corridor highway expansion worth US$99.7 million, now in its second phase to upgrade 125 kilometres in the Northeast.
"This year we are looking at another GMS highway project for roughly $200 million and we are working with the Public Debt Management Office as well as the Transport Ministry," he said.
Mr Subramaniam also revealed the bank's other interests are heavy-rail projects with the State Railway of Thailand, along with upgrading a number of provincial airports to regional airports to improve secondary cities and towns as part of the ADB'S 2020-2021 plans for the country.
"We are also looking at private sector projects including one of Bangkok's MRT lines, where sovereign financing may be needed for civil work," he said.
Mr Subramaniam did not reveal which line it is considering, but the Purple and Orange lines are possibilities.
"Non-sovereign support for the MRT went ahead last year, approving $300 million for the western extension of the Orange Line. We are working on the southern extension of the Purple Line," he said.
"The MRTA is already proceeding with the bidding process and the government wants us to award it much faster, but the ADB has not completed due diligence so we agreed to delay the award, with 2020 the likely date several lines will be considered," said Mr Subramaniam.