Thailand: GDP slows again in Q2
August 19, 2013
In the second quarter, GDP expanded 2.8% over the same period last year, which was down from the revised 5.4% rise recorded in the previous quarter and undershot market expectations of a 3.3% increase. The quarterly reading marked the slowest expansion since Q1 2012.
While the deterioration was broad-based, it primarily reflected a decline in domestic expenditure; private consumption and fixed investment (+2.5% year-on-year and +4.5% yoy respectively) recorded their lowest growth rates in more than a year. That said, government consumption accelerated from a 2.9% increase in Q1 to a 5.8% expansion in Q2.
On the external side of the economy, exports of goods and services expanded 2.8% in Q2, down from the 8.3% rise recorded in Q1. Meanwhile, imports rose 4.1% in Q2, which marked a deterioration over the 8.1% expansion observed in Q1. As a result, the external sector's net contribution to overall economic growth fell from plus 1.4 percentage points in the first quarter to minus 0.5 percentage points in the second quarter.
On a quarter-on-quarter basis, GDP contracted 0.3% in seasonally adjusted terms in Q2, which followed the 1.7% decrease observed in the previous quarter (previously reported: -2.2% quarter-on-quarter). Thus the economy has entered a technical recession. The Thai Central Bank kept its GDP forecast at 4.2% for 2013 and 5.0% 2014. FocusEconomics Consensus Forecasts panellists expect the economy to expand 4.8% in 2013, which is up 0.1 percentage points from last month's estimate. For 2014, the panel predicts that economic growth will reach 5.0%.
Author: Dirina Mançellari, Senior Economist