Thai Economy Slows in Q2


Thailand’s GDP expanded by 2.8 percent from a year earlier in the second quarter of 2015, slowing from 3.0 percent reported in January to March period but in line with market forecasts. While government spending surged, private consumption and investment slowed.

On the expenditure side, government expenditure expanded 4.6 percent, accelerating from a 3.3 percent increase, as compensation of employees increased 2.0 percent while consumption of fixed capital grew by 6.3 percent. Purchases of goods and services decelerated and social transfers in kind rose. Private consumption rose 1.5 percent year-on-year, moderating from a 2.4 percent growth in the previous quarter, as spending in durables declined while those in semi-durables and nondurables increased. Gross fixed capital formation expanded by 2.5 percent, slowing from a 10.7 percent growth in the March quarter, mainly due to a 3.4 percent decline in private investment as investment in machinery dropped. Public investment grew 24.7 percent, slowing from an a 37.8 percent expansion in the previous quarter, as investment in construction slowed and investment in equipment and machinery was flat.

Exports of goods and services grew 1.0 percent, the same as in the preceding quarter. Imports decreased by 0.3 percent, following a 4.0 percent growth in January to March quarter. 

On the production side, the non-agricultural sector expanded by 3.5 percent, as compared to a 4.1 percent growth in the first quarter of 2015. Growth was seen for: hotels and restaurants (+18.7 percent from +13.5 percent); construction (+17.3 percent from +25.4 percent); electricity, gas and water supply (+2.7 percent from +3.8 percent); transport, storage and communication (+8.6 percent from +7.1 percent); wholesale, retail trade and repairing (+3.7 percent from +7.1 percent); financial meditation (+8.6 percent from +9.6 percent); real estate, renting and business services (+2.5 percent from +2.8 percent) and  other community, social and personal service (+6.3 percent from +4.9 percent). In contrast, a contraction was seen for: mining and quarrying (-3.9 percent from -1.0 percent) and manufacturing sector (-0.7 percent from a 2.3 percent). The agricultural sector declined by 5.9 percent, compared to a 4.7 percent fall in the preceding quarter, as yield of major crops fall. Fishery also dropped by 1.6 percent, mainly due to a decline in fish volumes while production of shrimp increased.

On a quarter-over-quarter seasonally adjusted basis, the GDP increased 0.4 percent, acclerating from a 0.3 percent expansion in the previous period.

During the first half of 2015, the economy grew by 2.9 percent, as compared to a 2.8 percent expansion in the previous year. Growth was mainly driven by gross fixed capital formation (+6.4 percent from a 2.5 percent expansion in 2014) and private consumption (+2.0 percent from  +1.5 percent). Government consumption expanded 4.0 percent , slowing from a 4.6 percent growth. Exports grew 1.0 percent, remaining steady from the preceding year and imports declined by 1.9 percent, after registering a 0.2 percent in 2014.

For 2015, the Thailand's economic planning agency (NESDB) projected GDP growth to be between 2.7 percent to 3.2 percent, from an earlier estimates of  3.0 percent to 4.0 percent. 

Thai Economy Slows in Q2


NESDB l Rida Husna l rida@tradingeconomics.com
8/17/2015 11:28:16 AM