Thailand Country Risk Report

Published 25 March 2015 | Quarterly

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Thailand Country Risk Report

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
Risk Of Renewed Political Instability Remains
8
While Thailand's military leaders have taken tentative steps to restore civilian rule, a return to a well-functioning democracy is far from
While Thailand's military leaders have taken tentative steps to restore civilian rule, a return to a well-functioning democracy is far from
assured
The political divide will remain unresolved and the potential for renewed instability will continue to undermine the country's
long-term economic growth potential
table: Political Outlook
8
Long-Term Political Outlook
9
Political Woes To Persist
9
Thailand's political situation will remain highly volatile, and it is difficult to envision political stability over the next few years
Following the
military coup in May 2014, the roadmap to a return to civilian government remains unclear
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Growth Recovery To Continue On A Gradual Trajectory
14
Still soft domestic demand and weakness in external performance continue to keep the Thai economy sluggish
Consequently, we are
downgrading our 2014 real GDP growth forecast to 0
1% in
2015 on the back of ongoing efforts by the junta to revive the economy amid renewed political stability
Table: Economic Activity
14
Fiscal Policy
15
Fiscal Performance To Improve In 2015
15
We forecast Thailand's budget deficit to narrow from an estimated 2
0% in 2015, as we expect an economic
rebound to shore up fiscal revenue, while the removal of the rice subsidy scheme and the fall in oil prices should keep expenditure in
rebound to shore up fiscal revenue, while the removal of the rice subsidy scheme and the fall in oil prices should keep expenditure in
check
Table: Fiscal Policy
16
Monetary Policy
17
Accommodative Rates To Support Growth Recovery
17
We expect the Bank of Thailand (BoT) to keep its benchmark interest rate unchanged at 2
00% for the remainder of 2014 and into H115
to facilitate an economic rebound
A likely growth recovery and potential interest rate normalisation in the US in 2015 would spur the
BoT to normalise its benchmark interest rate
Table: Monetary Polic y
17
Balance Of Payments
19
Neutral Outlook For The Thai Baht
19
While a stronger US dollar will weigh on the Thai baht, a likely economic rebound in Thailand in 2015 and continued strong foreign direct
While a stronger US dollar will weigh on the Thai baht, a likely economic rebound in Thailand in 2015 and continued strong foreign direct
investment (FDI) inflows will provide support for the unit
On balance, we hold a neutral outlook for the Thai baht, and are forecasting the
currency to average THB32
Table: Current Account
19
Table: CURRENCY FORECAST
20
Chapter 3: 10-Year Forecast
23
The Thai Economy To 2023
23
Politics A Headwind, But Won-t Prevent Solid Growth
23
Ongoing political uncertainty, deteriorating demographic trends, and a lack of reform momentum are likely to undermine Thailand's real
Ongoing political uncertainty, deteriorating demographic trends, and a lack of reform momentum are likely to undermine Thailand's real
GDP growth over the next decade, although we still believe that solid growth rates are achievable assuming no major deterioration on
GDP growth over the next decade, although we still believe that solid growth rates are achievable assuming no major deterioration on
the political front
1% previously) over the next decade, versus the annual
average growth rate of 4
Table: Long-Term Macroeconomic Forecasts
23
Chapter 4: Operational Risk
27
Operational Risk Index
27
Operational Risk
28
Table: Operational Risk
28
Transport Network
29
Table: Transport Network
30
Economic Openness
32
Table: Economic Openness
33
Table: Top 5 Trade Partners & Product Exports (USDmn unless otherwise stated)
34
Table: Top 5 Product Imports (USDmn unless otherwise stated)
35
Chapter 5: Key Sectors
37
Infrastructure
37
Table: Construction And Infrastructure Industry Data, 2012-2017
38
Table: Construction And Infrastructure Industry Data, 2013-2023
39
Oil & Gas
41
Table: Oil Production, 2012-2017
41
Table: Oil Production, 2013-2023
42
Table: Gas Production, 2012-2017
43
Table: Gas Production, 2013-2023
44
Other Key Sectors
47
Table: Pharma Sect or Key Indic ators
47
table: Telecoms Sect or Key Indic ators
47
table: Defence and Security Sector Key Indicators
47
table: Food and Drink Sector Key Indicators
48
Table: Autos Sector Key Indicators
48
table: Freight Key Indicators
48
Chapter 6: BMI Global Assumptions
49
Global Outlook
49
Warning Signs Growing
49
Table: Global Asumptions
49
Table: Developed States, Real GDP Growth, %
50
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
50
Table: Emerging Markets , Real GDP Growth , %
51

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, Business Monitor International (BMI).

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 Business Monitor International (BMI) 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