Economic growth in the fourth quarter is expected to improve after the third quarter showed signs of recovery on the back of steady domestic consumption and private investment, says the Bank of Thailand.
Mathee: Household debt checks spending
Improved demand in export markets and robust tourism led the upturn.
Mathee Supapongse, the central bank's senior director of macroeconomic and monetary policy, said the economy is projected to be positive in the fourth quarter, but the forecast does not take into account any problems arising from ongoing political issues.
He said gross domestic product growth this year is expected to be in accordance with the central bank's latest forecast thanks to export recovery in some sectors.
The Bank of Thailand recently slashed its 2013 growth projection to 3.7% from 4.2% predicted in July, as did the Fiscal Policy Office, while the National Economic and Social Development Board recently projected a range of 3.8% to 4.3%.
Mr Mathee said the export improvement was only slight in the third quarter despite an increase in global demand as agricultural exports were disrupted by the shrimp's early mortality syndrome.
Third-quarter exports contracted by 1.65% year-on-year, which was an improvement from a contraction of 2.18% in the second quarter, according to a Commerce Ministry report.
Mr Mathee said domestic consumption was steady in September as accumulated household debt caused households to become cautious about spending.
The Private Consumption Index declined by 6.1% in September and 2.1% in the third quarter.
The Private Investment Index shrank by 3.3% in September as a result of falling vehicle sales and imports of machinery and equipment, especially in the electronics industry.
The Manufacturing Production Index declined by 2.9% on the back of fragile exports and subdued domestic demand. It contracted by 3.6% in the third quarter.
Tourism continued its robust growth, increasing by 27.6% year-on-year in September and 26.1% in the third quarter, with 2.1 million foreign tourist arrivals, mainly from China, Malaysia and Russia.
The current account registered a deficit of US$534 million in September and $888 million in the third quarter, which was less than the previous quarter due to less repatriation of profits and dividends.
Headline inflation decelerated to 1.42% due to lower prices in all major categories, while core inflation was as low as 0.61% on the back of limited pass-through of costs to retail prices in line with domestic demand.
The central bank expects to see a scaling down of the US Federal Reserve's cash-pumping scheme before next February, given the consensus on raising the US debt ceiling between the Democrats and Republicans.
Private credit growth expanded by 11.2% year-on-year in September, down from 12% in August, in line with a slowdown in corporate loans.