Thailand private sector drag

Private consumption growth is likely to remain slow next year, as household continues to deleverage. Private investment growth is not going to fare much better as well. Export growth is still lackluster and we are unlikely to see a turnaround in 2016. 

That leaves us with public sector spending for any source of optimism next year. In addition to the string of short-term stimulus measures already announced, the government is set to start rolling out some of its USD 50bn infrastructure projects in 2016. The main focus is to build railways and roads. It is an ambitious plan but the government seems aggressive enough in its projection. Higher fiscal deficit is to be tolerated, as public debt is expected to surge amid the infrastructure overhaul. 

Delivery is always the key. Looking at how public investment has fared in 2015. Indeed, public sector investment growth is set to be in excess of 20% this year, which is a record high. Public sector's contribution to overall GDP growth is more than 50% this year. 

How the private sector responses to this anticipated surge in public spending will determine if we were going to see 4% GDP growth in 2017, 2018 or 2019. There has been some improvement in confidence towards end-2015. It remains to be seen, however, if this will translate to actual increase in spending next year.