Friday, September 17, 2021


0.2% real GDP expansion proves Thai economy still robust: HSBC

Thailand’s economy has displayed remarkable resilience despite experiencing its largest wave of Covid-19 cases, HSBC Global Research said. It said Thailand’s real GDP still expanded by 0.2 per cent quarter on quarter (QoQ) in the first quarter of 2021.



Government spending did much of the heavy lifting to boost the economy, with public investment rising nearly 19 per cent QoQ (21 per cent year-on-year).

However, HSBC said challenges still loom for the Thai economy for the rest of the year. Covid-19 cases have risen more substantially in the second quarter, with a record number seen just today. Statistics also indicated that private consumption contracted in the first quarter as mobility declined. People’s mobility has not seen much improvement in Q2, which may indicate that private consumption will likely remain depressed in the coming quarter. Consumer confidence in April fell to a 22-year low as a result of the ongoing wave of cases. The government's aggressive spending thus far could also mean that public expenditure may slow in the coming quarters unless the government embarks on additional borrowing.

Rising Covid-19 cases and reduced mobility will also affect private investment, albeit not nearly to the same extent as private consumption. Details show that private investment grew just 0.1 per cent QoQ. The same is likely to be expected in Q2, as mobility restrictions are likely to delay private investments to the second half of 2021 at the earliest.

HSBC estimates that Thailand’s real GDP growth for 2021 could fall to between 1.7 and 2.2 per cent if there is not much improvement in Q2 from Q1. This expectation is also reflected in the National Economic and Social Development Council (NESDC)’s updated economic forecast.

As a result of the weak economy, targeted monetary measures may be in store to supplement the government's stimulus efforts. The Bank of Thailand (BOT) noted at its most recent meeting that fragile SMEs are a key risk factor to the recovery, in addition to a slow vaccine rollout. This suggests that targeted financial and credit measures may be to distribute ample liquidity in the market to affected businesses. BOT is expected to maintain its policy rate at 0.5 per cent.

Here are some figures at a glance:

• Thailand's real GDP fell by 2.6 per cent YoY in Q1 2021, better than market expectations (HSBC: -3.3 per cent).

• Government spending helped boost growth, but private consumption contracted and is likely to remain weak in Q2.

• BOT may maintain its policy rate at 0.5 per cent, though targeted monetary support may be in store given weak economy.


• Thailand's economy contracted by 2.6 per cent YoY in Q1 2021, but real GDP rose 0.2 per cent QoQ seasonally adjusted.

• Spending: Private consumption dropped 0.5 per cent YoY(previously +0.9 per cent); gross fixed capital formation rose 7.3 per cent YoY (previously -2.5 per cent) and government expenditure rose 2.1 per cent YoY (previously 2.2 per cent).

• Production: Agriculture up 1.9 per cent YoY (previously 0.4 per cent); manufacturing rose 0.7 per cent YoY (previously -0.7 per cent); and services dropped 4.2 per cent YoY (previously -5.9 per cent).

• NESDC revises down growth forecast for 2021 to 1.5-2.5 per cent from a previous range of 2.5-3.5 per cent.

Published : May 17, 2021

By : The Nation