Three key sectors tipped to cut spending in second half
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Three key sectors tipped to cut spending in second half

The weak economy and cheap fuel could discourage investment in solar and other renewable sources of energy. PORNPROM SATRABHAYA
The weak economy and cheap fuel could discourage investment in solar and other renewable sources of energy. PORNPROM SATRABHAYA

The business sector expects some major industries will pare back investment spending in the second half of this year due to the gloomy global outlook and weak domestic demand.

Supant Mongkolsuthree, chairman of the Federation of Thai Industries (FTI), said three sectors — fashion, renewable energy and real estate — would likely reduce their investment.

He blamed the weak domestic and global economies and falling oil prices for declining investment in the sectors.

"Both the Thai and global economies have yet to fully recover, and there are a lot of risks lying head in the second half," Mr Supant said.

"We're concerned there will be contractions in the real sectors, especially renewable energy and real estate, that would affect the economy."

The FTI expects the government's jump-start of major infrastructure projects will help to support the economy and offset weakness in other industries.

For now, the federation is maintaining its full-year projections of 3.5% GDP growth and 1% export growth, although it will revise the figures by the end of next month if necessary.

The FTI's forecast of slowing investment is in line with a poll conducted by the research and consulting services of the National Institute of Development Administration (Nida).

Nida surveyed 1,251 businesses, ranging from small and medium-sized enterprises to large companies, that are members of the FTI, said Kamphol Panyagometh, Nida's vice-president for research.

The survey found 50.7% of respondents expected the economy would be stable in the second half, 23.4% expected it to grow worse, 3.84% were unsure if it would be good or bad, and the rest had no opinion.

The weak domestic economy was the main reason given (50.9%) for why investment would slow down.

Some 37.5% cited the internal political situation, followed by fuel prices (24.7%), currency exchange rates (16.6%), interest rates (14.1%) and the changing global situation (13%).

Mr Kamphol said the poor global outlook and uncontrollable currency exchange and interest rates would slow investment by the real estate and fashion sectors in the second half.

Moreover, weak fuel prices are apt to discourage new investment in renewable energy.

"Nida believes the economy has not yet fully recovered, and that makes investors less confident about investing more in the second half," Mr Kamphol said.

On the other hand, he said sectors including electronics and health care would continue to grow throughout the year.

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