Are GDP forecasts reliable? An examination of models

As Thailand's economic outlook continues to be scrutinised, a growing debate has emerged over the reliability of GDP projections, particularly whether they reflect genuine domestic growth or are inflated by temporary trade flows.

- WICHIT CHANTANUSORNSIRI

At the heart of the discussion is how Thailand calculates its GDP.

Several private sector forecasting houses predict GDP growth for this year to tally less than 2%, more pessimistic than the Bank of Thailand's outlook.

The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) recently voiced its disagreement with the central bank's forecast, which projects 2.3% growth this year, with the committee arguing it does not see a clear growth driver to support such optimism.

The JSCCIB forecasts growth of 1.5-2.0% this year, with exports expected to contract between 0.3% and 0.5%, and inflation of 0.5-1.0%.

In addition, the panel expressed concern over the appreciation of the baht, which has strengthened to 32.5 per US dollar, a level that is stronger than most other currencies in the region.

The Federation of Thai Industries (FTI) called the 14.9% year-on-year surge in exports during the first five months of the year "inconsistent with reality", given that the Manufacturing Production Index has increased only marginally.