BoT blames short month for contraction

Fewer working days in February resulted in a temporary drop in domestic spending, exports and manufacturing during the month, says the Bank of Thailand.

Mathee Supapongse, the senior director for macroeconomic and monetary policy, said an increase in purchasing power spurred by wages and farm income could create a rebound of economic indices for March.

He also said the government's plan to invest 2 trillion baht in infrastructure should not negatively affect the economy, as it will be gradually implemented.

He said public debt will not be a concern if the investment helps to improve the overall economy's capacity.

Mr Mathee said February recorded a deceleration in domestic consumption and private investment that tracked a contraction of imports in consumer and capital goods.

Business sentiment last month was as strong as in January, showing confidence in future demand.

The Chinese New Year holiday and Makha Bucha Day, which both fell in February, were the main reason for the slowdown of the economy.

Manufacturing slightly contracted year-on-year as certain sectors running at nearly full capacity were unable to accelerate production in anticipation of the February holidays.

The banking system's loans pushed ahead with sustained growth of 15% year-on-year last month.

"If January and February are considered, the economy expanded pretty well. Purchasing power, employment and sentiment were all healthy in February," Mr Mathee said.

Importers accelerated orders in January, causing imports to moderate at 3.7% year-on-year growth in February, notably in capital goods and fuel. Exports contracted by 4.6%, resulting in a trade surplus of US$570 million in February.

The economy's current account returned to the black at $1.5 billion last month after falling into the red by $2.2 billion in January, said Mr Mathee.

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Writer: Parista Yuthamanop
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