Boston, MA -- (SBWIRE) -- 05/05/2014 -- Growth Forecast Reduced For 2014
Thailand's political stalemate has had a devastating impact on economic growth, and with no signs of a possible resolution in the near term, we expect economic activity to remain depressed in H114. Latest data published by the Bank of Thailand (BoT) showed that the Thai economy expanded by 0.6% year-on-year in Q413, translating into full year growth of just 2.9% for 2013. Crucially, we highlight the sharp contraction in gross fixed capital formation (GFCF) and private consumption in Q413 (-11.3% and -4.5% y-o-y, respectively), which suggests that businesses and households are keeping their spending plans on hold as they await further clarity on the political situation.
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The latest data has reaffirmed our view that economic growth in Thailand will come in disappointingly weak for 2014. Consequently, we have downgraded our real GDP growth forecast from 3.8% to 3.2%. BMI's outlook for the ports and shipping sector is for positive volume growth in a 2-7% range. Freight transport infrastructure investment projects and Thailand's increasing role in intra-regional trade should keep the shipping business growing a little faster than the economy as a whole, though we acknowledge serious downside risk to this outlook from the above.
Headline Industry Data
- Gross tonnage at Laem Chabang, the country's largest port, set to rise by 3.0% to 69.08mn tonnes in 2014, and will average growth of 3.8% a year over our medium-term forecast period to 2018.
- Box handling at the same port to rise 2.3%, to 6.18mn twenty-foot equivalent units (TEUs) in 2014, and will average 3.0% over the medium term.
- At the Port of Bangkok, BMI projects that tonnage will grow by 4.2% in 2014, to 20.23mn tonnes, with container handling set to grow by 7.0%, to 1.61mn TEUs.
- We expect the real value of foreign trade to grow by 4.6% in 2014, up from 3.3% the year before. Imports will be up by 5.2%, ahead of exports that will grow by 3.9%.
Key Industry Trends
TNSC Confident Of 5% Rise In Exports: In February the Thai National Shippers' Council (TNSC) maintained its prediction of a 5% rise in exports during 2014, despite the ongoing political turmoil in the country, according to Nopporn Thepsitthar, chairman of the TNSC. The global economic recovery, particularly in countries like the US, the EU and Japan, is expected to be the key driver for the growth in Thai exports in 2014.
MOL And RCL To Unveil New Service: Mitsui OSK Lines (MOL) has collaborated with Regional Container Lines (RCL) to unveil a new service RBC4 in Asia, it was reported in March. The new service is scheduled to start from April 6 with RCL and MOL deploying one and two vessels respectively. The new service will call at Qingtao, Shanghai, Ho Chi Minh City, Laem Chabang, Bangkok, Laem Chabang and Manila.
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