Despite revising its estimates for several Asean economies, Asian Development Bank (ADB) kept Thailand's economic growth forecast flat at 3.5% in 2017 because of a slowdown in public investment in the first half of the year.
ADB maintained its Thai forecast from its April projection. However, the bank raised its growth figures for Singapore from 2.2% to 2.7%, Malaysia from 4.4% to 5.5%, and the Philippines from 6.4% to 6.5%.
The bank also maintained Indonesia's growth rate projection at 5.1% and cut Vietnam's estimate from 6.5% to 6.3%. For all of Southeast Asia, ADB increased its growth rate projection from 4.8% to 5% this year.
Luxmon Attapich, ADB's senior country economist, said a slowdown in public investment was the main driver behind the unchanged projection. In the first half of the year, government investment grew a meagre 1.1%, mainly because of a deceleration of projects and a high base effect. Private investment also grew modestly at 1%.
Sluggish investment in the first half was partly offset by exports, which exceeded expectations. A recovery in global demand pushed the country's exports up 7.4% for the period, she said.
However, private consumption rose a modest 3.1% in the first half, slightly slower than the 3.4% growth rate it logged in the same period last year. Despite rising farm income, domestic consumption remains pressured by swelling household debt.
"The global economic and trade rebound will continue supporting the country's exports," Mrs Luxmon said. "Thailand's exports will grow 5% this year and 7% in 2018."
Public investments are likely to improve next year as the government's infrastructure projects accelerate, she said. Public investment should encourage private investment growth through 2018.
Even in this scenario, ADB is maintaining its 3.6% growth rate forecast for the Thai economy next year.
Local and international volatility may threaten the economic outlook for 2018. Geopolitical factors will be a key risk, as Thailand's next general election is scheduled for the second half next year.
Mrs Luxmon said the 1.5% policy rate is reasonable and in line with other developing countries in the region. ADB expects the Thai central bank to focus on promoting sustainable economic growth through existing monetary policy.
