Domestic Demand Leads to Unprecedented Growth in Economy of Thailand

Thailand Growth

Thailand Growth

Spurred on by the ongoing Thailand manufacturing recovery as well as domestic consumption in Thailand, the country witnessed an unprecedented rate of growth in the period extending from April to June.

The second quarter of the year saw an economy growth in Thailand of 3.3% compared to the performance exhibited in the past quarter. Economic analysts had predicted the Thailand economy to grow by a minimum of 1.7%.

Government Measures

A number of measures have been adopted which are aimed at increasing domestic consumption in Thailand to help recover from the destructive floods that occurred just last year. Many analysts believe that the actions had assisted with compensating for a drop in the demand for exports around the world.

According to experts, the Thailand economy happens to be one of the more durable financial systems compared with its contemporaries present in Asia in terms of threats and headwinds from nations such as Europe and the US.

In the later half of last year, Thailand was affected by some of the most awful cases of flooding seen in over a decade. The situation resulted in numerous industrial units being closed off and production halted, which consecutively hit the manufacturing and exports sector of the country. The administration has made its plans public of using more than 2tn Thai baht, which is equivalent to £40 billion or $63.4 billion, on infrastructure plans in a bid to avoid any further calamities of such kinds and also to improve growth. The government has also promised to increase the minimum salaries in the state at the same time.

Market analysts stated that while these methods were probably going to contribute further to the economy growth in Thailand, the country needs to be cautious in making sure that such steps do not lead to a rise in both consumer prices and debt at a fast pace. They claimed that if not limited in the proper way, such developments may later demonstrate themselves to be unfavourable to progress.

Most Asian countries have to keep an eye out for hazards with regard to whether this development is motivated by twin discrepancies and whether this results in inflation or not, in case they decide to embark on domestic driven growth. If the outcome is inflation, then it turns out to be unsustainable.

Limitations

The downside seems to be that in spite of domestic demand and Thailand manufacturing recovery, exports in the country suffered a drop of 4.2 percent in the month of June compared to a year before, the fourth time a decline has occurred in a six month period, even as the unit of a renowned automobile manufacturer experienced record regional sales this year following the relaxing of supply constraints and the offer of the Thai government regarding tax savings to first-time buyers amounting to as much as 100,000 baht. Achieving the Thai government’s full-year export increase target of 15 percent might prove to be tough after shipments lessened by 2.1 percent in the first half of the year. Financial growth might be supported by adjusting the economic policy if required.

Aubrey Chang
Aubrey Chang, Associate Editor Industry Leaders Magazine (www.industryleadersmagazine.com)

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