FPO upbeat on recovery

Cargo ships pictured near the port in Bangkok. Officials expect Thailand's economy to meet the projection of 3.3% growth this year.

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The Fiscal Policy Office (FPO) has maintained its 3.3% economic growth projection for the year, signalling that recovery is firming up, says a senior official.

Director-general Krisada Chinavicharana added that for next year, the FPO projects growth to range between 2.9% to 3.9%, driven mainly by state investment and expenditures, including direct investment by government, local administrations and state enterprises.

"The country's expansion next year will be led by state investment, as it was this year," said Mr Krisada.

He said total investment next year will amount to 1.02 trillion baht, a 6.7% increase from the 2016 fiscal year. Investment will include infrastructure projects such as the double railway and new electric train routes.

For 2016, the FPO maintains its projection of 3.3%, slightly higher than 2.8% seen in 2015 on the back of the numerous measures by the government aimed to pump up consumption through spending.

The government spending for 2016 is likely to reach 955 billion baht, a 10.5% rise from last year.

This year will be supported by the growth of tourist arrivals to 33.3 million, despite it being slightly lower than 33.8 million tourists targeted earlier.

"Tourism revenue this year will stand as high as 1.68 trillion baht, but not lower than 1.71 trillion baht," Mr Krisada said, adding that next year tourist arrivals will rise to 37.2 million, with 1.92 trillion baht in revenue.

Real private consumption in 2016 should end this year with 2.9% growth, exceeding the earlier projection of 2.3%, he said. Meanwhile, private investment this year is likely to improve from a contraction of 2% last year to a 1.6% expansion, but it is still lower than the earlier prediction of 2.6%.

Next year, private investment will continue to stay low as a result of capacity utilisation rate in the manufacturing sector remaining weak this year and is not set to improve next year.

Finance Minister Apisak Tantiworavong agrees that economic expansion will exceed 3%, in line with the prospects of fourth quarter consumption, despite low consumption during the week after the demise of His Majesty, King Bhumibol Adulyadej.

"From the government's report, the consumption dropped sharply before bouncing back within two weeks, so we are confident we can have over 3% growth," said Mr Apisak.