After floods, Tisco sees 2.8% contraction in Q1 GDP

The key index fell 7.1 per cent in the first three months of the year.
“The first-quarter GDP figure is estimated to come out negative year on year. However, we forecast GDP growth of 9.4 per cent quarter on quarter in the period and, therefore, it is unlikely there will be a technical recession,” said Kampon Adirek-sombat, senior economist at the research house.
Gross domestic product shrank 10.7 per cent in the last three months of last year when compared with the previous quarter. For the whole of 2011, the economy expanded by just 0.1 per cent.
The Tisco Economic Strategy Unit forecasts that GDP will expand 5 per cent for the whole of 2012, driven mainly by domestic demand and public spending.
“The economy is expected to expand by 3.5-4.5 per cent year on year for both the second and third quarters. We are likely to see fourth-quarter growth in double digits, due to the sharp contraction in the last quarter of 2011,” Kampon said.
Headline inflation is expected to stabilise in the current quarter before rising in the latter half of the year, particularly in the fourth quarter, given a low base for energy prices.
The Tisco unit maintains its forecast for 2012 headline inflation at 3.5 per cent.
The research house expects the policy rate to remain flat at 3 per cent throughout the remainder of the year, with an upside risk in the final quarter from rising inflationary pressure on the back of a likely recovery in domestic demand.
The Bank of Thailand kept the policy rate on hold at 3 per cent at the last two Monetary Policy Committee meetings, citing its efforts to shore up the flood-hit |economy.
Other countries such as India and Australia have signalled easing monetary policies, which could support the region’s economy, said the Tisco unit.
The overall Asian economy continues its robust expansion, with China expected to show full recovery in the second half of the year, |supported mainly by easing monetary policy and fiscal-stimulus |measures.
Asia excluding Japan is expected to grow 7.2 per cent in 2012, while the region’s growth is likely to come in at 7.6 per cent next year, according to the US-based Institutional Brokers’ Estimate System.
“Monetary easing in several Asian countries gives a positive sign for stock markets in Asia excluding Japan,” said Vorasinee Sangvornvet-phan, head of wealth advisory at Tisco Asset Management.
Given the high economic growth in Asia excluding Japan, Tisco Securities yesterday launched a Bt1-billion feeder fund, Tisco Asia Pacific ex Japan Trigger 10% No 6.
The fund targets a 10-per-cent return within four months.
The subscription period is May |9-18.
“Asian stocks continue to grow with a sharp upside,” said Saharat Chudsuwan, senior vice president of Tisco Asset Management.