North, Northeast economies slow in Q2, BOT offices report

The slowdown in the Northeast was due to declining spending of consumers in line with falling incomes of farmers amid rising household debt, according to Pichit Patrawimolpon senior director of the BOT Northeastern Region Office. He added that consumers there were much more cautious with their spending, as the momentum of the government’s stimulus packages ended.

Investment by the construction sector outside the municipal areas slowed down, as indicated by the declining sales of construction materials, but construction in urban areas accelerated.

About 18 per cent of would-be home-buyers in the Northeast whose income is below Bt20,000 have seen their mortgage applications rejected, according to a joint survey of the BOT office and Khon Kaen University, Pichit said.

He noted that this proportion was still low. Most of those affected were already carrying some debt, encouraged by the government’s stimulus measures.

Because of the concern over a possible bubble in the condominium sector in the Northeast, the survey was conducted by the BOT office and the E-Saan Centre Business and Economics Research of Khon Kaen University. It found that only a small number of condominium projects were finished and ready to be handed over to customers. Their delivery was expected to be delayed because of the labour shortage. The commercial banks have also been much more cautious on mortgage approvals.

Supawadee Punsri, senior director of the central bank’s, Northern Region Office, said the economy there also slowed in the second quarter, while state spending, manufacturing and the farmers’ incomes decreased.  

By contrast, however, the tourism sector boomed. In the first half the number of passengers at Chiang Mai Airport surged 20 per cent year on year to 3 million. 

She said the challenge in the second half was waning purchasing power as people concentrate on paying instalments on their vehicle and housing loans, making them much more cautious on their spending.