Domestic consumption, investment drive economy
The economy continued to expand in June and the second quarter of this year, driven by domestic consumption and private investment, but exports flagged due to the global slowdown. Somchai Sujjapongse, director-general of the Fiscal Policy Office, said ye
For April-June, VAT receipts increased 6.3 per cent compared with the same quarter last year.
Consumers appeared to remain upbeat on their future income, judging by robust new passenger car sales – up 84 per cent in June and 77 per cent in the second quarter. Car sales in the first quarter contracted by 5.4 per cent.
Private investment also increased in June as imports of capital goods rose 8.8 per cent, but decelerated from 68.3 per cent in May. Capital goods imports in the second quarter were up 22 per cent, double the growth rate in the first quarter.
Commercial vehicle sales were also buoyant, up by 68.3 per cent in June and 62.3 per cent in the second quarter.
However, the bad news was that exports sagged by 4.2 per cent in June and 0.04 per cent in the second quarter.
Exports to Europe, Japan and Hong Kong were hard hit and this dragged down overall exports.
The export sector was a victim of the stubborn economic crisis in Europe and the slower economic growth in China and India.
The Industrial Production Index in June slipped by 9.5 per cent year on year.
The Finance Ministry has closely monitored economic developments in Europe. The situation there had deteriorated as the Industrial Production Index in Europe dropped by 2.8 per cent and unemployment set a record high of 11.1 per cent.
China and India are also a cause for concern.
The Chinese economy grew only 7.6 per cent in the second quarter, which was the slowest in three years. India was facing a threat of economic instability as the inflation rate increased 7.3 per cent.
“However, we expect the Thai economy will expand 5.7 per cent this year due to government spending,” he said.
Government capital spending increased by 14.1 per cent in June to Bt22 billion.
However, overall government spending dropped by 14.6 per cent year on year to Bt459.9 billion.
Government revenue in June rose 21.2 per cent to Bt133.5 billion and increased 3.8 per cent in the second quarter to Bt620 billion.
The government ran a budget surplus of Bt169.1 billion in the second quarter, he added.
