Economy may have shrunk over last 2 quarters
There is a chance that Thailand's quarterly economic expansion will be in negative territory if year-on-year growth in gross domestic product comes in at just 3 per cent for the first three months of the year, Don Nakornthab, director of the Bank of Thail
His comment followed a statement by the secretary-general of the Office of the National Economic and Social Development Board (NESDB), Akom Termpitayapaisit, who said the economy’s year-on-year expansion would most likely be around 3 per cent in the first quarter.
With seasonally adjusted economic expansion between the final two quarters of 2014 now recorded at 1.7 per cent, the NESDB is expected to release this year’s official first-quarter GDP data on May 18.
"The quarter-on-quarter growth at around 2 per cent in the fourth quarter of 2014 is quite aggressive when compared to normalcy in the past, so a slowdown of quarter-on-quarter expansion from the fourth quarter of 2014 to the first quarter of 2015 is expected.
"However, the fact that the numbers for consumption and exports did not look so good in the first two months of this year means the quarter-on-quarter size of the economy might actually have contracted," said the central bank’s macroeconomic chief.
"Nevertheless, I believe quarter-on-quarter performance in the second quarter will most likely be better than in the first quarter, because of somewhat of a recovery in the export sector and an increase in government spending," he added.
The central bank said the baht had strengthened by around 1 per cent since the last Monetary Policy Committee meeting on March 11, which is generally in line with the movement of other currencies in the region.
"The latest strengthening of the baht is due to the capital flow into the Kingdom’s bond and stock markets. Nevertheless, the strengthening of the currency is in line with other currencies in the region, and the rate of appreciation is also less than other currencies," said Don.
The currencies of China, India, Taiwan, Malaysia, Singapore and South Korea have appreciated by 1, 1.2, 1.6, 1.6, 2.8 and 3.5 per cent respectively, he added.
Don said US$492 million (Bt15.92 billion) had flowed into the Thai bond market between April 1 and April 16, while $204 million had flowed into the stock market from April 1 to April 20.
The surge of capital inflow into Thailand’s stock markets in the past month is most likely a temporary effect as a result of reduced market fears over a US interest-rate hike, while more capital is expected to come this way once the economic recovery and government mega-projects become more tangible in the second half, securities houses said.
Therdsak Thaveeteeratham, executive vice president for the research department at Asia Plus Securities, said the influx of capital was most likely a temporary phenomenon due to the high level of capital-flow fluctuation following US rate-hike speculation this year.
CLSA Securities country head Prinn Panitchpakdi held a similar view, adding that the inflow in the past two weeks had mostly gone to the energy sector.
