Cover 2017

Economic review Thailand

The Netherlands Embassy in Bangkok regularly publishes economic reviews about Thailand, Thai-Dutch bilateral trade and investment and our business support services to Dutch companies. This is our review on the full year of 2017.

Thailand’s economic outlook is promising after posing a robust growth of 3.9 per cent in 2017, the highest in five years. The government is confident that the country’s economy is on track to further accelerate this year. The GDP growth for 2018 is forecast at 4.1 per cent average, supported by external factors, clearer investment recovery and improving domestic consumption. Bilateral trade with the Netherlands significantly expanded by 10.5 per cent in 2017.

Thailand’s economic performance in 2017 and outlook for 2018

On 19 February, the Office of the National Economic and Social Development Board officially reported the Thai GDP in the fourth quarter of 2017 expanded by 4 per cent from the same period of 2016, continuing from 4.3 per cent growth in the previous quarter. After seasonally adjusted, the Thai economy in the fourth quarter grew by 0.5 per cent from the third quarter.

For the whole year, the economy expanded by 3.9 per cent in 2017, improving from 3.3 per cent in 2016. The GDP growth was driven mainly by strong merchandise exports and tourism sector, thanks to the economic pickup of Thailand’s key trading partners. In 2017, export value (in USD terms) grew by 9.7 per cent. Hotels and restaurants sector expanded by 8.5 per cent with total tourism receipts increased by 9.5 per cent in line with an 8.8 per cent increase in the number of foreign tourists (35.4 million visitors).

The Thai economy in 2018 is expected to grow faster than 2017, in the range of 3.6-4.6 per cent, supported by:

  • the rising global economy which will sustain the robust growth of Thai exports and subsequently stimulates the manufacturing production;
  • increasing government expenditure and accelerating public investment as infrastructure projects being more materialized;
  • pronounced recovery of private investment led by public infrastructure projects, the expansion of export sector, and improvement in business sentiment;
  • improved employment situation and household income following the expected increase in both farm and manufacturing production, and continued expansion of key service sectors.

Meanwhile, the agriculture sector is likely to soften after the high growth last year from an unusually low base and possible impact from the La Nina. In addition, there remains some risks from global economic and financial system volatility, which could be triggered if major countries normalize their monetary policies too fast, or investors change expectations towards the US economy that lead to the depreciation of the USD and appreciative pressure on Thai Baht. Political conditions in Europe and geopolitical tensions in the Korean peninsula and Middle East also warrants close monitoring.

For medium- to longer-term, Thailand continues to face challenges on declining productivity, ageing population, inequality in various dimensions, and some outdated regulations as well as corruption.

The Netherlands-Thailand trade and investment

Bilateral trade

According to CBS data, the Netherland’s total merchandise trade with Thailand surged 11.4 per cent in 2017 (to EUR 4.0 billion from EUR 3.6 billion in 2016), driven mainly by the growth of the Netherland’s import from Thailand which expanded by 14.5 per cent (to EUR 2.8 billion from EUR 2.5 billion in 2016). Major contributions are increases in the imports of electrical and electronic products, computers, integrated chips, motorcycles, prepared poultry and rubber products.

The Netherlands’ exports to Thailand grew by 4.2 per cent (to EUR 1.13 billion from EUR 1.08 billion in 2016), thanks to significant increases in the export of Dutch milk and dairy products, metal scrap, fertilizer, and medical products. Nevertheless, the supplies of some food products, vegetables, chemicals and machinery from the Netherlands registered some declines.

Bilateral investment

The Netherlands is the biggest EU investor in Thailand (and the 4th largest overall after Japan, Singapore and the US). The Bank of Thailand statistics show the accumulated FDI from the Netherlands to Thailand increased to USD14.3 billion as at the end of the third quarter of 2017, from USD11.6 billion of the same period of 2016, or accounted for 6.5 per cent of total FDI in Thailand.

The Netherlands is also no. 1 EU destination for Thai direct investment overseas (the 8th ). Thai direct investment in the Netherlands at the end of the third quarter of 2017 stood at USD4.6 billion, rising considerably from USD2.8 billion at the end of the third quarter of 2016.

Business Support Services by the Embassy

The Embassy continues to proactively provide business support services including market intelligence and business opportunities e.g. factsheets, market studies and other publications to Dutch business interested in doing business in Thailand.

General trade enquiries such as export and import questions, setting up company in Thailand, or sector knowledge remain the most popular request. Last year, the team provided support to 906 trade requests, 81 visits, 28 events, 5 intelligences, and 71 Orange Carpet facilitation. By sector, agricultural & food received the most requests.