Thailand's Economic Boom Is Holding


Recent updates for Thailand show that the economy is holding momentum. In spite of the global economic downturn, domestic demand, exports and public investment continue to support the expansion.

In the fourth quarter of 2012, the GDP expanded 18.9 percent yoy and 3.6 qoq. And although this highest yearly growth on record was caused by the adjustment after last year's contraction caused by severe floods, exports and domestic demand were crucial to the expansion. Indeed, consumer confidence has been rising steady in the last six months and retail sales, which increased in February 5.86 percent from a year earlier, remain robust. Moreover, in March, Thailand reported the lowest trade deficit since June of 2012, as imports dropped 11.5 percent and exports grew by 4.5 percent year-on-year. In fact, strong demand for Thai products from Japan, the United States, China and Asia connected with higher shipments of rice due to reduced stocks from competing countries, helped to boost exports. To make things even better, in March, manufacturing production increased 0.54 percent from a year earlier, recovering from a 1.2 percent drop in the previous month. More importantly, the government recently announced a spending programme worth 2 trillion baht. The investment, which intends to improve the railway system, roads and the Bangkok airport, is estimated to annually reduce transportation costs by 2 percent and increase GDP by 1 percentage point. On the negative side, the Bath appreciation against the U.S. dollar is raising concerns about exports competitiveness, putting pressure on the Bank of Thailand to cut the interest rates.

 


In the last three months of 2012, the GDP expanded 18.9 percent yoy and 3.6 percent qoq. Household consumption and exports were the biggest contributors to growth rising 12.2 percent and 19 percent respectively.
 


In March, exports rose 4.5 percent yoy, mainly boosted by increasing shipments of rice, vehicles, electrical appliances and construction materials. Manufacturing production recovered in March, climbing by 0.5 percent yoy.

     

Consumer spending, one of the main drivers of the economy in recent years, remained robust in 2012. Although in April consumer confidence declined, in March, it reached the highest level since 2006.
 
In the last 12 months, the Thai baht has appreciated 3.5 percent against the U.S. dollar, as high attractive returns on bonds, increased the capital inflows into the country.

 

 


Joana Taborda | joana.taborda@tradingeconomics.com
5/9/2013 9:17:07 AM