Thailand Country Risk Report

Published 23 June 2015 | Quarterly

  • 54 pages
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  • Includes 3 free updated quarterly reports
 
$1,195.00
Thailand Country Risk Report

Core Views

  • Thailand is rapidly regressing from democracy. With the military junta continuing to consolidate power, there is a growing risk that Thailand could remain a military-governed country for longer than expected, which would undermine its long-term economic growth prospects. A return to democracy is therefore far from assured.

  • We expect the Thai economy to continue its rebound on the back of the military government's pro-growth policies. That said, export headwinds from cooling regional demand, the risk of renewed political violence, as well as the high level of household debt inform our outlook for the recovery to take place gradually. As such, we forecast Thailand's real GDP growth to come in at 3.5% in 2015, slower than our initial forecast of 4.1%.

  • The ongoing economic rebound in Thailand, as well as efforts by the military government to keep fiscal spending in checks, should lead to improvements in the country's fiscal accounts. As such, we forecast Thailand's budget deficit as a share of GDP to narrow from 2.2% in 2014 to 1.7% in 2015 and 1.1% in 2016. A key downside risk could come from renewed political instability which would derail the ongoing economic recovery.

  • Following a surprise interest rate cut from the Bank of Thailand (BoT) on April 29, strengthening external growth headwinds and falling price pressures are informing our expectations for the central bank to pursue further monetary easing. As such, we forecast the BoT to cut its one-day repurchase rate by a further 25 basis points (bps) to 1.25% in 2015. We have also downgraded our real GDP growth forecast to 3.5%, from 4.1% previously.

  • The Thai baht is set for further weakness following a break of the key technical support level at THB33.11/USD. Accordingly, we now forecast the Thai baht to average THB33.25/USD, down from THB32.75 previously. That said, we do not expect major baht weakness, as we expect the Thai economy to recover, the current account balance to continue...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Impeachment A Major Step Backwards For Politics
8
TABLE: Political Overview
8
Long-Term Political Outlook
9
Political Woes To Persist
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Recovery On Track, But Numerous Headwinds Ahead
14
TABLE: Economic Acti vity
14
Fiscal Policy
15
Fiscal Improvement On The Cards
15
TABLE: Fiscal Policy
16
Monetary Policy
17
Accommodative Rates Through 2015
17
Exchange Rate Policy
18
THB: No Major Weakness In Sight
18
TABLE: CURR ENCY FOR ECAST
19
TABLE: Current Account
20
Chapter 3: 10-Year Forecast
23
The Thai Economy To 2024
23
Politics A Headwind, But Won't Prevent Solid Growth
23
TABLE: Long-Term Mac roec onomic Forecasts
23
Chapter 4: Operational Risk
27
SWOT Analysis
27
Operational Risk Index
27
Operational Risk
28
TABLE: Operational Risk
28
Availability Of Labour
29
TABLE: Asia - Availability of Lab our
30
TABLE: Lab our Force Empl oyme nt By Sect or ('000)
31
Crime Risk
33
TABLE: Asia - Crime
34
TABLE: Crime Statistics
35
Chapter 5: Key Sectors
37
Automotives
37
TABLE: Aut os Total Market - Historical Data And Forecasts
37
Food & Drink
39
TABLE: Food Consumpti on Indicators - Historical Data And Forecasts
40
Other Key Sectors
45
TABLE: Oil and Gas Sector Key Indicators
45
TABLE: Pha rma Sector Key Indicators
45
TABLE: Defence and Security Sector Key Indicators
45
TABLE: Telecoms Sector Key Indicators
46
TABLE: Infrastructure Sector Key Indicators
46
TABLE: Freight Key Indicators
46
Chapter 6: BMI Global Macro Outlook
47
Global Outlook
47
Deflationary Pressure
47
Table : Global Assumpti ons
47
Table : Devel oped States , Real GDP Growt H, %
48
Table : BMI VERSUS BLOO MBERG CON SENSUS REAL GDP GRO WTH FOR ECASTS, %
48
Table : Eme rgi ng Markets , Real GDP Growth , %
49

The Thailand Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Thailand. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Thailand's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI  Research.

Key Uses

  • Forecast the pace and stability of Thailand's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Thailand's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Thailand, including currency volatility, the commodity price boom and protectionist policies.

The Thailand Country Risk Report by BMI  Research includes four major sections: Economic Outlook, Political Outlook, Operational Risk and Key Sector Outlook.

Economic Outlook:

How will the Thailand' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Thailand through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Thailand Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Thailand and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Thailand, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Thailand over the next 5-years?

BMI's Thailand country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Thailand Market - Political Strengths, Weaknesses, Opportunities and Threats facing Thailand.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Thailand's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Thailand’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Thailand's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in Thailand?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Thailand against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:

  • Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
  • Assess your company’s exposure to country specific operational and business risks, using BMI’s insight on the current dangers of operating in the market.
  • Evaluate Thailand’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.

Key Sector Outlook*

Which industry sectors in Thailand will grow fastest, and where are the major investment opportunities in the market?

BMI identifies investment opportunities in Thailand's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry, including recent sector developments and major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2015-2019, using BMI's proprietary industry modelling technique, which incorporates key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across and within each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

*Not all Country Reports contain the Key Sector Outlook chapter. Please enquire above for more information.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express