Thai spending picks up, but weak exports weigh
Thailand’s private consumption and investment rose in September, but the country’s exports and industrial output shrank again, suggesting the economy is not regaining momentum.
Stubbornly weak exports and domestic demand have kept Southeast Asia’s second-largest economy in the doldrums since the army seized power in May 2014 to end months of political turmoil. Growth was just 0.9 per cent last year.
The index for private consumption, which makes up half of the economy, rose 0.5 per cent in September from August, with investment up 0.4 per cent, the Bank of Thailand said.
“The economy recovered at a gradual pace, with signs of recovery in private consumption and investment. But the export sector remained a drag,” Roong Mallikamas, a senior central bank official, told a news conference, referring to September data.
She added that the economy had also performed better in the third quarter than the previous quarter, but the pace of recovery was slow.
In April-June, the economy grew 0.4 per cent from the previous three months and 2.8 per cent from a year earlier.
Third quarter gross domestic product is due on November 16.
Charnon Boonnuch, economist at Tisco Securities, said the third quarter was expected to be the strongest this year, predicting quarterly growth of 1.4 per cent and annual expansion of 3.4 per cent.
“Looking ahead, I remain cautious whether the good numbers in September will be short term or long term,” he said.
The BOT has forecast GDP growth of 2.7 per cent for 2015 and 3.7 per cent next year.
Weak global demand, especially from China, and structural problems at home are dragging on exports and manufacturing, while consumption is being curbed by high household debt.
Exports, equal to more than 60 per cent of GDP, shrank for a ninth straight month in September. The BOT has forecast exports will contract 5 per cent this year for the third year running.
Thai exports, in particular electronics, “have not been able to move up the value chain fast enough,” Nomura wrote. “There is also a diplomatic challenge which has emerged under the current military regime in its inability to re-negotiate or participate in trade agreements.”.
Annual industrial output in September dropped 3.6 per cent, having fallen every month, except February, since April 2013. The decline in output was led by electronics, but auto production rose 4.4 per cent.
Capacity utilisation in September rose to 58.83 per cent from a revised 57.85 per cent in August. Thailand is a regional production and export hub for hard drives and cars.