At the time of writing, The World Bank is predicting Thailand’s real economic growth for 2015 to stand at around 3.5% putting the country’s growth rate amongst the lowest in Asia Pacific, says Pierre Leung, Sales Manager of Fresh Property, a boutique property agency that specializes in sales and rental of residential property in the Sukhumvit area of Bangkok.
“While December is the season to be merry, it is also a time of reflection. This past year, Thailand has faced a lot of headwinds and obstacles toward regaining its economic momentum. While Thailand is currently relatively stable politically, overseas investors are still uncertain about the country’s stability. Slower economic activity from high-income countries (United States, the Euro Zone and Japan) has negatively affected export levels. On top of this, to add salt to the wound, Thailand’s Tourist/ Travel Sector has been battered, with declining Russian arrivals and the terrible Bangkok Bombings in August, which has shaken the sector.
However, while self-reflection is important, a New Year also means a new start!
This country’s economy is a diverse ecosystem which is affected and driven by a variety of factors. While economies are usually summed up as a series of numbers (GDP, Export Growth Rate, Tourist Arrivals, etc.), it is important not to forget that a country’s economic future lies in the strength of its people and inhabitants. Despite some setbacks, Thailand by virtue of its human capital and resources, is capable and ideally placed to jump back on the growth bandwagon. ASEAN Economic Community (AEC) is right around the corner, and will provide an impetus in gradual steps for Thailand’s political and business leaders to improve the country’s competitiveness. The “Land of Smiles” is probably one of the best positioned economies to benefit from the ASEAN integration.
On a more factual level, The World Bank has predicted an increase to 4% growth rate for 2016-2017. Next year the general consensus is that the high-income countries will experience an improvement in their local economies and Thailand’s exports are set to benefit from this upward trend. The Thailand Tourism Authority, has succeeded in refocusing the country’s marketing efforts toward new markets notably China; in 2015 alone, Thailand has welcomed a massive increase of approximately 7 million Chinese tourists. While this is obviously great for the hospitality business and other tourist related sectors, it also has the dual benefit of showcasing the country’s economic and investment potential to Chinese money and investors.
Rebuilding its competitiveness
While the new Government’s popularity is not unanimous, they have the Thai economy at heart and they are taking firm steps to try and rebuild its regional competitiveness. To spearhead this effort, they have approved numerous Infrastructure projects; such as cementing a deal with the Chinese Government to construct an 873-km railroad that will connect Nong Khai province to Map Ta Phut in Rayong and on to Bangkok.
These efforts are not only restricted to long-term projects; in the shorter term, they have recently approved numerous property stimulus measures such as cuts in the housing transfer and mortgage fees. A more upbeat economic outlook can only mean a more promising environment for the property industry. While numerous property developers have been cautious over the past year by slowing down project launches; 2016 can only mean an improvement in the level of activity. Thailand property investors have always been a fickle crowd, exuberant at times and timid at the drop of a pin. However, an improvement in the general economic climate should allow the property industry to inch forward and up gradually.
While this is subject to much debate, Thailand’s long-term fundamentals are solid. The international community have always been surprised at Thailand’s ability to rebound in the face of adversity, even dubbing the country “Teflon Thailand”. Thais are by nature resilient optimists and it is the tenacity of a country’s inhabitants that drives true economic growth. While many will dismiss my claims as “rosy optimism”, Thailand is on the road to recovery and will in time rebound into a stronger and better investment hub.