Q2 GDP at 5.3% disappointing

[elef]

Bangkok Post

26-08-2008

Link

 

Q2 GDP at 5.3% disappointing

Exports failed to offset consumption

 

CHATRUDEE THEPARAT

 

Economic growth slowed more than expected in the second quarter, as soaring inflation and a slowdown in private and government investments began to take their toll on the economy.

 

The economy expanded by 5.3% in the three months ended June 30 from a year earlier, after a 6.1% year-on-year gain in the first quarter, according to the National Economic and Social Development Board (NESDB).

 

Growth slowed for the first time in more than a year as even the higher export value of rice and rubber failed to offset a decline in domestic spending.

 

Government spending dropped 2.4% year-on-year for the period from a 0.1% decline in the first quarter, while household consumption increased only 2.4% compared to 2.6% in the previous quarter.

 

Total investment grew by 1.9%, down from 5.4% in the first quarter on eroding confidence in the private sector.

 

However, the agriculture sector grew 6.5%, outpacing the 3.5% expansion in the first quarter thanks mainly to higher contribution from crop and livestock production. The non-agricultural sector increased by 5.2% against 6.4% growth in the first quarter.

 

Exports in dollar terms rose 25.19% in the second quarter from a year earlier, an improvement from 20.88% recorded three months before.

 

In the meantime, inflation in the second quarter was 7.5%, up from 5.8% in the first quarter.

 

The NESDB expects inflation to hit a 10-year high of between 6.5% and 7% this year, up from a range of 5.3% to 5.8% forecast in May, but below the 7.5% to 8.8% projected by the Bank of Thailand in July.

 

NESDB secretary-general Ampon Kittiampon said the economy might expand more than 5% in the second half of the year. It grew 5.7% in the first half of this year.

 

The state planning agency raised its full-year growth forecast to a range of 5.2% to 5.7% from 4.5% to 5.5% predicted in May due to healthy exports in the first half and an expected boost from government stimulus measures.

 

''If the government pushes forward with its megaprojects, including infrastructure construction, and creates confidence among investors, our GDP [growth] in the last six months of this year is most likely to be no less than 5.2%,'' said Mr Ampon.

 

However, Nipon Puapongsakorn, an economist at Thammasat University, warned threats still remained for the economy in the second half, particularly from the economic slowdown in the three superpowers _ the United States, the European Union and Japan.

 

However, the weaker baht was expected to give exports a reprieve, he said.

 

Dr Charl Kengchon, managing director at Kasikorn Research, said second-quarter growth was well below the market consensus of 5.7%. But he described 5.3% growth as ''not too bad'', considering global uncertainties due to the US sub-prime crisis.

 

''The first half's average growth of 5.7% is better than the second half of 2007. But we still must expect that growth in the second half will continue to decline, as the global economic slowdown will affect export growth,'' he said.

 

He said Kasikorn Research forecast GDP growth in the second half at 4.8%, with 2008 growth at 5.3%, with a 5-5.5% range. He said negative growth factors for the rest of the year included global economic slowdown and domestic political instability. But he identified positive factors in government spending and falling inflation and oil prices.

 

Finance Minister Surapong Suebwonglee assured yesterday that the government would do its best to boost the country's economic growth this year to 6% as targeted.

 

 

[Tiger Moth]

After a couple of years now of political turmoil, with a chef as PM, Taksin having apparently miscalculated his power and now seeking exile in the UK after his wife's conviction and with many outstanding charges against him, I am shocked at how well Thailand is doing.

 

It amazes me that the country manages to function at all!!