During 1H14, Thai land transport business exhibited a slight decline in growth wherein its contribution to the GDP at constant price shrank 1.6 percent during 1Q14 due to ebbing agricultural production on unfavorable weather conditions, plus political uncertainty that was responsible for declining industrial production and household spending. The land transport business was further hit by low export growth and shrinking car sales after the expiration of the first-time car buyer program.
During 2H14, we at KResearch expect that overall land transport business will resume growth due to improving economic conditions as domestic political turmoil will likely ease and rice farmers will gradually get payments per the rice brokerage program, thus helping bolster their spending power and investment in the upcoming rice growing season. Moreover, this business will be driven by a greater volume of international land transport to support cross-border trade, as reflected in its rising share from 5.2 percent of Thailand's total international transport in 2007, to 11.1 percent in 2012, thanks to thriving cross-border trade and the coming AEC in 2015. We also see opportunities for our land transport business ahead because Thailand is centrally located within the region, thus giving us an advantage as a land transport hub for ASEAN.
We may now begin to see an end to the political strife, though it will take some time for the Thai economy to recover, thus KResearch has assessed that land transport business in 2014 will grow only marginally over-year. We also expect that the contribution of land transport business to the GDP at constant price may reach only THB239.2-242.5 billion in 2014, up 2.4-3.8 percent YoY, which would be lower than the THB233.6 billion or 6.8 percent YoY growth reported for 2013.
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