Thailand Could Be Joining Southeast Asia's Economic Boom

(Bloomberg) -- An economic boom that’s reverberated across Southeast Asia has finally crossed over to Thailand.

The economy, which has lagged its neighbors this decade, is projected to have grown at the fastest pace in more than four years last quarter even as the baht surged. There’s reason to be optimistic as exports post double-digit percentage gains and the end of a yearlong mourning period for King Bhumibol Adulyadej bolsters the outlook for consumption.

“We’re becoming more and more optimistic as the recovery in exports is more enduring than we expected,” said Eugenia Victorino, an economist at Australia & New Zealand Banking Group Ltd. in Singapore. “There’s still a lot of challenges, particularly the inability of the government to ‘crowd in’ private investment. That would really re-energize the economy.”

Gross domestic product probably grew 3.8 percent in the third quarter from a year ago, according to the median estimate of nine economists surveyed by Bloomberg. That would be the quickest pace since the first quarter of 2013, according to the data. The government will release official figures on Nov. 20.

Southeast Asian economies are enjoying a growth resurgence with expansion in Vietnam and the Philippines quickening. Malaysia’s economy grew at the fastest pace in more than three years in the third quarter, data showed on Friday.

Exports

Thailand’s exports are coping with the strength of the baht, posting gains of more than 10 percent in each of the five months through September. The baht has advanced more than 8 percent in 2017, among the best performers in Asia.

“The broad-based rise in exports has continued despite a strong baht,” said Tim Leelahaphan, Bangkok-based economist at Standard Chartered Bank. “The baht has been driven by healthy macroeconomic fundamentals rather than portfolio inflows, and these should continue to support the currency for the rest of this year and in 2018.”

The government approved this month tax breaks for year-end shopping and has embarked on a 1.5 trillion baht ($45 billion) plan to build infrastructure and advanced industry along the eastern seaboard. The Bank of Thailand has held its key interest rate near a record low since 2015.

Thailand -- under military rule since 2014 -- is on course for elections next year, injecting uncertainty into the outlook. While some analysts expect a growth boost, others are concerned political divisions could once again flare up.

--With assistance from Michael J. Munoz

To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net.

To contact the editors responsible for this story: Niluksi Koswanage at nkoswanage@bloomberg.net, Nasreen Seria at nseria@bloomberg.net, Karl Lester M. Yap, Sunil Jagtiani

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