Thailand: Economy expands at slowest pace in nearly two years
February 17, 2014
In the last quarter of 2013, GDP expanded a meager 0.6% over the same period of the previous year. The figure was well below the 2.7% expansion recorded in the third quarter although it did overshoot the 0.3% rise the markets had expected. Furthermore, the figure marked the slowest expansion that has been recorded since Q1 2012. In the full year 2013, the economy expanded 2.8%, which was down from the 6.5% expansion observed in 2012.
The quarterly deterioration mainly reflected a fall in domestic demand. Private consumption fell 4.5% over the same period last year (Q3: -1.3% year-on-year), while government spending decelerated significantly from a 7.3% increase in the third quarter to a 0.9% rise in the fourth quarter. In addition, fixed investment fell 11.3% in Q4, which was down from the 6.3% decrease recorded in Q3.
On the external side of the economy, exports of goods and services rose 2.0% in Q4 (Q3: 3.8% yoy). Meanwhile, imports fell 3.5%, which contrasted the 0.8% rise observed in the previous quarter. As a result, the external sector's net contribution to overall economic growth rose from 2.4 percentage points in the third quarter to 3.5 percentage points in the fourth quarter.
On a quarter-on-quarter basis, GDP expanded 0.6% in seasonally-adjusted terms in Q4, which was down from the revised 1.4% increase recorded in Q3 (previously reported: 1.3% quarter-on-quarter).
The Central Bank expects the economy to expand 4.8% this year. FocusEconomics Consensus Forecast panelists see the economy growing 3.6% in 2014, which is down 0.7 percentage points from last month's estimate. For 2015, the panel projects that GDP will grow 4.7%.
Author: Dirina Mançellari, Senior Economist