Thailand: Economy accelerates for second consecutive quarter in Q2
August 16, 2016
The Thai economy gained momentum for the consecutive quarter in Q2 and GDP increased 3.5% year-on-year, expanding at the fastest pace since Q1 2013. This came in above the 3.2% expansion registered in Q1 and overshot the 3.2% rise the markets had expected. Q2’s acceleration was mainly fueled by domestic demand and a positive contribution from net exports.
Domestic demand rebounded strongly in Q2 on the back of strong growth in private consumption. Growth in household spending picked up from 2.4% in Q1 to 3.8% in Q2, which also marked the strongest rate since Q1 2013. Conversely, government consumption decelerated substantially from a massive 8.0% increase in Q1 to a 2.2% expansion in Q2. Fixed investment also moderated its pace of growth in the second quarter (Q2: +2.7% year-on-year; Q1: +4.9% yoy).
On the external side of the economy, exports of goods and services grew 0.6% in Q2, which was down from the 4.9% expansion tallied in Q1. Conversely, imports decreased 2.2% in Q2 (Q1: -4.7% yoy) and marked the fourth consecutive period of contraction. Due to the increase observed in exports and the further plunge in imports, net exports contributed 2.0 percentage points to overall economic growth.
Sequential data corroborated the increase showed by the annual data as GDP expanded 0.8% in seasonally-adjusted terms in Q2. This followed the 1.0% increase tallied in the previous quarter.
Author: Dirina Mançellari, Senior Economist