Asian Development Bank (ADB) yesterday hiked its forecast for Thai GDP growth to 3.8% this year and next, while the UN Economic and Social Commission for Asia and the Pacific (Escap) upgraded its 2017 estimate to 3.5% and raised its 2018 view to 3.4%.
The Manila-based ADB predicts that a pickup in exports and private investment will propel Thailand's economic growth to 3.8% in both 2017 and 2018, an increase from September's estimates of 3.5% and 3.6%, the bank said in a release.
Private investment is showing strong signs of recovery in line with 4.3% third-quarter growth in manufacturing production, the highest rate recorded in 18 quarters.
Merchandise exports have been much better than earlier projected, expanding by 9.7% year-on-year in the first 10 months of 2017, ADB said.
"Strengthening growth in private investment is expected to accelerate further in 2018, in line with improvement in exports and the implementation of the Eastern Economic Corridor (EEC) that aims to upgrade the seaboard provinces of Chachoengsao, Chon Buri and Rayong into a leading economic zone," the bank said.
Government investment slowed in 2017, it said, but is likely to recover in 2018 as construction starts on several infrastructure projects for which bidding is complete.
ADB emerged as the latest to join a string of upgrades for Thailand's economic growth forecasts, and its upwardly revised figures matched the Bank of Thailand's projections of 3.8% for this year and next.
The Finance Ministry's Fiscal Policy Office also recently raised its economic growth estimate for this year to 3.8% and roughly estimated that GDP growth would surpass 4% in 2018.
The National Economic and Social Development Board, the state planning unit, has lifted its GDP growth estimate to 3.9% this year and forecasts economic growth in a range of 3.6-4.6% next year.
Thai GDP in the third quarter grew at its fastest pace since the first quarter of 2013, driven by exports, personal spending and private investment. In the first nine months of 2017, the economy grew by 3.8% year-on-year.
"The subregion is benefiting from stronger investment and exports, with accelerating growth for Brunei, Malaysia, the Philippines, Singapore and Thailand," ADB said. "Infrastructure investment continued to play an important role in Indonesia, the Philippines and Thailand. Robust domestic demand -- particularly private consumption and investment -- will continue to support growth in the subregion."
Even though ADB's economic growth forecast of 3.8% for next year is below the Finance Ministry's prediction, both forecasts suggest that the country's growth is improving, said Finance Ministry spokeswoman Kulaya Tantitemit.
The ramp-up in state investment and growing exports in line with the global economic rebound are expected to lend further support to the economy next year, she said.
"We estimate that GDP growth next year will exceed 4%, driven by public investment, while ADB's forecast of 3.8% is lower than our prediction," Ms Kulaya said. "We, however, need to consider the details of the ADB report and why it projects that Thailand's GDP growth will come in at that level."
Shipments of semiconductors and consumer electronics have grown at a double-digit pace in Thailand, Malaysia, South Korea and Taiwan this year, according to an Escap report titled "World Economic Situation and Prospects 2018".
The growth reflects rising external demand and the strong integration of these economies into the global and regional production networks of the electronics industry.
"In the outlook period, export growth is expected to temper, given waning base effects," Escap said. "However, a continued expansion in external demand will generate positive spillovers to the domestic economy through the income and investment channels.
"Going forward, the Thai economy is projected to register growth of 3.4% in 2018, supported by a pickup in public investment that largely offsets weaker investment in the private sector. Lingering political uncertainty will continue to weigh on investor sentiments."
Kirida Bhaopichitr, research director at the Thailand Development Research Institute, forecasts 4% GDP growth next year, the same rate as estimated for this year, driven by exports and tourism.
The forecast is based on the assumption that the global economy will continue to recover, led by the US. Exports are thus expected to continue as a key factor fuelling the country's economic growth in 2018.
"Export growth could reach 10% this year and come in slightly lesser in 2018 because of this year's high-base effect and export prices that are unlikely to rise compared with this year," Ms Kirida said.
She said export growth is expected to boost employment and wages for three sectors: manufacturing, agriculture and tourism.
Global oil prices are projected to be marginally higher in 2018, but prices of other commodities, such as sugar and rubber, are unlikely to rise because of oversupply, she said.
Inflation is expected to rise on higher prices for oil and rice and increasing consumer demand, Ms Kirida said.
Thailand's policy rate is unlikely to rise because inflation is projected to be below 1.2%, while a higher US yield will result in a narrower interest gap between Thailand and the US, she said.