Though 2014 was a tough year for Thailand's economy, 2015 is shaping up to be a much better year due to several factors. The year started off with a rebound in tourism and exports and these have worked to stimulate the economy somewhat. Lower oil prices have also initiated an economic recovery. Though there was a decline in manufacturing in 2014, this new economic growth has helped to revive the manufacturing sector.
Growing Household Debt
Many experts are pointing out that Thailand must address several factors in order to continue to see economic growth. One of the major issues lies with household debt. All the latest numbers say that household debt is growing at a much more rapid pace than in past years. These numbers are now at 60% of the gross domestic product due to lower interest rates and easy access to credit. A popular government program offers tax rebates to those who are first-time car buyers and this has encouraged many citizens to purchase an auto.
Agriculture and Tourism
In addition to these factors, the price of two of Thailand's most widely grown crops, rubber and rice, have continued to remain low. This has resulted in lower incomes for those involved in the agricultural sector. A drought has been hard on agriculture and has contributed to a weak growth rate. Economists believe that tourism numbers are not as strong due to political instability, but could turn around within a few months.
To address these problems, the government of Thailand is attempting to encourage agriculture, manufacturing and tourism growth with several new incentive programs. In addition, there has been a surge of tourism from China and this sector is up 15.9 percent. Last year, the military took power to try and end political unrest, but this has not had the desired results thus far and investors remain concerned about the stability of the Thai government.
Growth in Private Construction Projects
Investments in the private sector declined slightly at 0.3 percent in the last quarter of 2014, but have grown steadily with a hearty recovery rate in private construction. Public construction also continues to grow at a steady rate with new investments in machinery and equipment.
Though both Thailand's central bank and HSBC lowered their forecasts somewhat for 2015, they are now saying that 2016 should be a strong year for economic growth in every sector. Exports are expected to pick up, along with better consumer prices. Though China has experienced its share of economic problems over the summer of 2015, the government has reacted quickly to rectify that by cutting its US Treasury holdings. China's financial woes will in some ways affect all the Asia Pacific markets, but the finance ministry's head of fiscal policy, Krisada Chinavicharana believes that the economy will pick up in the second half of 2015 due to stronger government spending.
Import Export Growth
Global demand for Thai exports has traditionally kept the economy strong with manufacturing growing at 0.7 percent. The National Economic and Social Development Board (NESDB) reports that economic growth slowed by 2.8% in the second quarter, but predicts that stronger exports and government spending will spur an overall gain by year's end.
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