Country Report Thailand
The Economist Intelligence Unit, May 2013, Pages: 25
Real GDP expanded by 5.3% year on year in the first quarter of 2013, down from growth of 19.1% in the previous quarter, the National Economic and Social Development Board (NESDB) said on May 20th. However, on a seasonally adjusted, quarter-on-quarter basis, real GDP shrank by 2.2%.
There was never any doubt that Thailand's economic growth would slow on a year-on-year basis in January-March, as the previous quarter's double-digit growth rate had mostly reflected a statistical recovery from the 2011 floods, which brought economic activity in the country's industrialised central region to a standstill. Nevertheless, the first-quarter slowdown was sharper than the NESDB had expected; it responded to the GDP results by revising down its forecast for growth in the year as a whole to 4.2-5.2%, from 4.5-5.5% previously. The weaker than expected growth may increase calls by the government for the Bank of Thailand (BOT, the central bank) to lower interest rates when its monetary policy committee next meets on May 29th. The BOT's governor, Prasarn Trairatvorakul, has said that he would consider lowering the one-day repurchase rate if growth weakens sharply. On balance, however, we still believe that there will be no change in interest rates.
Private consumption fuelled first-quarter GDP growth: it rose by 4.2% year on year and contributed 2.1 percentage points to economic expansion. Personal incomes have been supported by various populist schemes, such as higher minimum wages and guaranteed rice prices for farmers, along with relatively subdued inflation, which rose by 2.9% year on year on average in January-April. Gross fixed capital formation expanded by 6% and, along with a rise in inventories, contributed 1.6 percentage points to GDP growth. Despite concern over baht appreciation, net exports of goods and services contributed 1.4 percentage points to GDP growth in the first quarter. Exports rose by 8.4%, compared with import growth of 8.2%.
Country Report Thailand
GDP shrinks in first quarter
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Analysis
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