Thailand: Economy contracts at sharpest pace in nine quarters
May 19, 2014
In Q1, GDP contracted 0.6% over the same period last year. The figure contrasted the 0.6% expansion tallied in Q4, but came in above the 2.2% contraction the market had expected. Furthermore, the figure marked the sharpest contraction that has been recorded since Q4 2011.
The quarterly deterioration mainly reflected a fall in domestic demand. Private consumption fell 3.0% over the same period last year (Q4: -4.1% year-on-year), while government spending accelerated from a 0.8% increase in the fourth quarter to a 2.9% rise in the first quarter. Fixed investment fell 9.8% in Q1, which was up from the 11.4% decrease recorded in Q4.
On the external side of the economy, exports of goods and services fell 0.4% in Q1 (Q4: +2.0% yoy). Meanwhile, imports fell 8.5%, which followed the 3.5% fall observed in the previous quarter. As a result, the external sector's net contribution to overall economic growth rose from 3.5 percentage points in the fourth quarter to 4.6 percentage points in the first quarter.
On a quarter-on-quarter basis, GDP contracted 2.1% in seasonally-adjusted terms in Q1, which contrasted the revised 0.1% increase recorded in Q4 (previously reported: +0.6% quarter-on-quarter).
The Central Bank expects the economy to expand 2.7% this year and 4.8% in 2015. FocusEconomics panelists reduced their growth projections for both this year and next. For 2014, the panel expects the economy to grow 2.4%, which is down 0.2 percentage points from last month's estimate. For next year, the panel projects that GDP will grow 4.3%.
Author: Dirina Mançellari, Senior Economist