V-shaped recovery set to pick up pace this quarter
The economy is in the first stage of a V-shaped recovery and a sharp revival will become more apparent during the current quarter through a rise in business sentiment, a continuous increase in consumption and the return of fiscal policy as an economic sti
However, the recovery of the export sector remains sluggish and the central bank will review its previous export-growth forecast of 3 per cent for the year at the next meeting of the Monetary Policy Committee on September 17.
“Many of the economic engines are beginning to function at a normal pace, but it cannot be said that any one of them is working at full capacity or is the current hero of the economic recovery, since all of them are working together at the moment,” said Roong Mallikamas, senior director of the bank’s Macroeconomic and Monetary Policy Department.
“Currently, we are at the beginning of a V-shaped recovery. The first month of the third quarter has ended and there are still numbers from the remaining two months which we have to wait and see,” she said.
Roong said that while the overall economy had continued to recover in July, economic activities were mostly unchanged from the previous month as improving domestic spending was offset by a slowdown in the export recovery.
Meanwhile, recovery in the production sector was still slow due to high inventory levels which were being run down, while the level of goods imports remained low, at US17.249 billion (Bt551 billion), when compared to last year.
Goods exports in July amounted to $18.7 billion, well down on June’s $19.5 billion and a decrease of 0.5 per cent when compared to the same period last year.
The contraction was mainly due to a slowdown in exports to three major trading partners – China, Japan and Asean – while agricultural prices, especially for rubber, continue to drop sharply, she explained.
On the domestic front, the private consumption index in July increased year on year for the first time in 11 months following a rise in consumer confidence, while the tourism sector continued to pick up from the end of June.
However, several countries in July still maintained their warnings about travel to the Kingdom, therefore the number of international tourists – 1.915 million – was 10.9 per cent lower than in the same period last year, she said.
The governor of the Bank of Thailand said on Wednesday at the “Thailand Focus Seminar 2014” that the economy had a chance of expanding by 2 per cent this year, while the bank’s spokesperson told the press on Thursday that the 2-per-cent mark was mathematically possible if the economy grew by 4 per cent during the second half.
The central bank’s latest official forecast for full-year economic growth is 1.5 per cent, the country having escaped falling into a technical recession in second quarter.
