NESDB cuts full year growth estimate after Q1 figures below forecast
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Economic growth came in worse than expected at 5.3 per cent year on year in the first quarter, given lower-than-forecast export expansion of 4.5 per cent to US$56.18 billion (Bt1.67 trillion) after slowing purchasing orders from major markets, according t
First-quarter growth also contracted 2.2 per cent from the final quarter of last year.
The NESDB has revised its estimate for this year’s economic growth to 4.2-5.2 per cent after slower growth in the first three months, secretary-general Arkhom Termpittayapaisith said yesterday.
The biggest drag on year-on-year growth came from slowing investments, which rose 6 per cent. There was a drastic slowdown in private outlays, particularly in imports of plant and equipment.
Given the huge outlays made in the first three quarters of last year, firms may still be utilizing plant and equipment bought back then, he said.
Private consumption expenditure also slowed, up 4.2 per cent year on year and down 1.2 per cent quarter on quarter, and about a third of the pace in the final quarter of last year.
Households cut back on non-durable goods as well as services (the latter also reflecting slower tourism numbers), but there was strong consumption of durable goods, especially of motor vehicles.
Although consumer confidence was strong over the period, thanks to favourable tax and wage changes, as well as stable unemployment and inflation, the NESDB said households had been cautious about spending due to political and global economic uncertainty.
Spending via credit card also slowed in the quarter.
Moreover, there was a deceleration in government spending, which expanded by 2.2 per cent compared to 12.5 per cent in the fourth quarter of 2012, but this was attributed to a fall in compensation of government employees.
Exports were up 8.4 per cent year on year in the first quarter, compared to nearly 20 per cent in the fourth quarter, while imports were up 8.2 per cent, against 15 per cent previously.
By industry, manufacturing contracted 5.9 per cent quarter on quarter in the first three months, against a 4.7-per-cent expansion in the final quarter of last year.
Agriculture, construction and services all expanded, albeit by very modest rates of 0.1 per cent to 0.6 per cent, quarter on quarter.
Concern over exports
Arkhom said tourism was only a support for the economy, while exports, which account for 70 per cent of gross domestic product, remained a concern despite their 4.5-per-cent expansion.
The export figure was lower than the government’s target of 9 per cent and the NESDB’s estimate of 11 per cent. Tourism expanded by 14.8 per cent in the period.
Risks to growth include delayed recovery of the global economy in the first half and likely recovery, led by the United States and Japan where their currencies are depreciating, only in the second half, plus delays in product prices in the globe.
The stronger baht will likely affect operators’ income and price competitiveness, despite its weakening so far this month, said the official think-tank.
