Outlook for Thai consumer sector bullish on stable inflation

Inflation is projected to rise to 1.5% next year.

BMI Research is holding a positive outlook for Thailand's consumer sector on the back of a favourable labour market conditions and low inflation.

The research house believes that these factors will support real wage growth and bolster purchasing power.

It forecasts private consumption real growth to accelerate over 2017.

Here's more from BMI:

Favourable labour market conditions in Thailand will drive wage growth over 2017, which will benefit discretionary spending.

Thailand's labour market is characterised by a low and stable unemployment, we forecast the unemployment rate to come in at 0.9% over 2016 and 2017.

Monthly unemployment rates have remained stable over 2016- declining since July.

Underpinning our view, data from the Bank of Thailand shows that wage growth accelerated from 1.9%.

In Q116 to 2.5% in Q216. Wage growth in Thailand has remained on an upward trend over the past decade and we expect it to continue into 2017. BMI forecasts whole economy average annual real wages to grow by 2.7% in 2016 and 3.5% over 2017.

Low and stable inflation will support further real wage growth which will serve to bolster consumer purchasing power.

Inflation in Thailand has remained stable over the last few years and we expect this to continue over our forecast period (2015-2020).

According to our Country Risk team, inflationary pressures will remain low due to a credible fiscal trajectory and modest credit growth (six-to-24 months).

With that said, we forecast consumer price inflation to accelerate from 0.3% over 2016 to 1.5% over 2017. This acceleration will be driven by a rebound in oil prices which our Oil & Gas team forecasts Brent to average USD45.50/bbl in 2016 and USD55.00 in 2017.

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