Economy expected to return to growth in Q1
The Thai economy will recover in the current quarter thanks to increased domestic spending on post-flood recovery by both the public and private sectors, Kasikorn Research said yesterday.
The research note said increased domestic spending on post-flood recovery would help revive the country’s exports – currently impeded by weak demand abroad – and industrial production, which will take some time to resume former output levels.
Given this, the research has assessed that gross domestic product will resume growth of perhaps 1 per cent year on year in the first quarter, after a steep contraction in the fourth quarter of last year.
The research said that economic figures for December as released by the Bank of Thailand reflected the severity and broad-based impact of the recent flooding on the country, spanning from July through early December. The situation started to ease towards the end of the year. As a result, the economy – across most sectors – began to recover in December, amid a gradual improvement in consumer sentiment. However, some economic activities continued to contract.
Agricultural production resumed 5-per-cent month-on-month growth, wherein increased production of other crops helped offset flood damage to rice output. Industrial production grew 37.9 per cent month on month, with disruptions in transport and raw-material shortages having been resolved, while flood-affected producers resumed production.
Private consumption expanded 1.7 per cent month on month, after contracting for three straight months. Private investment contracted at a slower pace of minus 2.3 per cent month on month. These improvements were due mainly to recovery work and the government’s post-flood rehabilitation initiatives that have led to higher automobile sales and fuel consumption, while imports of capital and consumer goods also rose substantially, along with cement sales and value-added-tax collections.
Exports in December recorded growth of 12.5 per cent month on month, the first increase in five months, led by hi-tech industrial products using locally sourced materials. Imports advanced 8.6 per cent over November, led by intermediary products, capital goods and consumer goods.
As the import value outstripped exports, Thailand sustained a trade deficit for the first time in six years at US$238 million (Bt7.2 billion). However, the current account saw a surplus of $1.94 billion, due to flood-compensation benefits paid by international insurance companies.
