Domestic investment likely to drive Thailand's economic growth this year

In 2012 and 2013, the Thai economy suffered because of the prolonged political uncertainty. Following the military coup in 2014, the political climate eased slightly, but the consumer and investor confidence continue to be weak and this impacted growth prospects negatively.

Last year, Thailand’s full year growth continued to be low at about 2.8 percent from a 2014’s weak growth of 0.9 percent. This is mainly due to tentative private investment because of weak sentiment, sluggish private consumption, especially with consumer debt already more than 86 percent of the GDP at the end of 2014, weak external demand and excess production capacity and delays in government disbursements because of red tape and the enhanced anti-corruption measures, noted Commerzbank in a research note.

This year, domestic investment is expected to mainly drive Thai economic growth rather than private consumption or external demand. It is quite vital that the promised infrastructure projects start in order for the Thai economy to perform better this year, according to Commerzbank.

“If so, we could see growth firmer at 3.1 percent in 2016. This is highly contingent on the fiscal boost coming through”, added Commerzbank.