Private consumption in Thailand stalled in November, the latest sign that the economy is still sputtering and putting more pressure on the military government to ramp up infrastructure spending to spur growth. The army seized power in May to end months of political turmoil and put Southeast Asia's second-largest economy back on track, but progress has been patchy at best in the face of weak exports and sluggish domestic demand.
The economy grew only 0.2 percent in the first nine months of the year. Private consumption, which makes up half of the economy, was unchanged in November from October, the central bank said on Tuesday, although it rose 0.7 percent from a year earlier. In a rare bit of good news, the index for private investment rose 1.4 percent on the month, but was down 0.4 percent on the year.
"The economy in November continued to recover at a slow pace", driven by private consumption and investment, the central bank said in a statement. The Bank of Thailand on Friday cut its 2014 economic growth forecast nearly in half to 0.8 percent from 1.5 percent, which would be the weakest pace since devastating floods in 2011, citing weak exports and slow public spending. It pared its 2015 growth estimate to 4.0 percent from 4.8 percent. But the junta maintains that next year will be better. Last week, Deputy Prime Minister Pridiyathorn Devakula said he expects 2015 growth of 4.5 percent, driven by public investment.
Thailand's export and manufacturing sectors are seen dragging on the economy well into next year as global commodity prices are likely to remain weak alongside soft demand seen from China, Japan and Europe. Domestic demand also is expected to remain subdued as consumption is curbed by high household debt, while tourism is recovering only slowly. "The recovery is still uneven, which is normal for an economy in the early stages of recovery," Roong Mallikamas, a senior BOT official, told a news conference.
Factory output in November declined 3.5 percent on the year, down for a 20th straight month. Exports, which are equal to more than 60 percent of the economy, picked up in September and October but slipped in November. The central bank thinks exports will contract 0.5 percent this year and rise only 1 percent in 2015.
With other parts of the economy shaky, the only hope is for government investment projects to kick-start growth. "What we are left with is government expenditure, particularly in infrastructure investment projects," said Bernard Aw, economist with Forecast in Singapore. But he said relying too much on fiscal spending "may heighten growth risks as the timeliness of the infrastructure projects' implementation will be critical."
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