Thailand’s December private consumption and investment rose but exports tumbled again, according to central bank data published yesterday, showing the economy is still making little headway after 20 months of military rule.
The Bank of Thailand’s (BoT) index for private consumption, which makes up half of the economy, gained 0.7% in December from November, while investment climbed 0.3%.
Private consumption was lifted by an acceleration in car purchases prior to a hike in the vehicle excise tax starting this month, as well as year-end tax deductions for shoppers.
In the final quarter of 2015, overall economic activity “continued to recover at a gradual pace”, the BoT said in a statement.
“As economic recovery was not broad-based, overall private investment stayed at a low level,” the central bank added.
The junta seized power in May 2014 to end months of political unrest, but has struggled to revive the economy. Soft global demand has crimped shipments, while high household debt and low farm prices have curbed consumption. Growth was at 0.9% last year.
Kelvin Chen, owner of a factory in Chonburi making processed paper mostly for auto parts and textiles, said business was tough.
“Our sales and production have fallen by 30% since 2014 as the economy and exports are not running,” he said. “Our clients can’t sell our goods because of no orders. Some of our clients have moved to Vietnam and I’ve never heard back from them since.”
Last month, the central bank cut its 2016 economic growth estimate to 3.5% from 3.7%, with flat exports. It predicted 2015 growth at 2.8%. Official 2015 gross domestic product data is due on February 15.
BoT governor Veerathai Santiprabhob told Reuters that Thailand had no need to cut the policy rate, now at 1.50%, as fiscal spending was supporting growth.
The central bank next reviews policy on February 3.
Thailand’s central bank governor Veerathai Santiprabhob gestures during an interview with Reuters in Bangkok yesterday. Thailand has no need to cut interest rates to counter the impact of China’s slowdown on the economy as fiscal stimulus is driving slow but steady growth, he said.
