GDP up 3.5% in Q2 and 3.4% in first half

GDP up 3.5% in Q2 and 3.4% in first half

Tha National Economic and Social Development Board reports the gross domestic product rose 3.5% in the second quarter this year. (Photo by Pattarapong Chatpattarasill)
Tha National Economic and Social Development Board reports the gross domestic product rose 3.5% in the second quarter this year. (Photo by Pattarapong Chatpattarasill)

Gross domestic product rose 3.5% year-on-year in the second quarter this year, compared with 3.2% in the first quarter, with growth in the first half of 2016 at 3.4%, the National Economic and Social Development Board (NESDB) announced on Monday.

When seasonal factors were adjusted, the GDP in the second quarter increased 0.8% over the first quarter.

Supportive factors were increases in household spending, the export of services, and government investment.

Household spending rose 3.8%, up from 2.3% the previous quarter, as spending on durable goods, especially passenger cars, rose for the first time in 13 quarters by 4.8%, compared with a 26.6% decline in the previous quarter.

The government's spending on consumption rose 2.2%, slowing from an 8% increase the previous quarter.

Overall investment expanded 2.7% as government investment grew by 10.4%.

Private investment edged up 0.1%, compared with a 2.1% rise in the first quarter, as investment in construction dropped 2.1% while investment in machinery went up 0.7%.

The value of product exports amounted to US$51.03 billion, dropping 3.1%. The decline was at 1.4% in the first quarter. The NESDB attributed it to the economies of trading partners slowing and lower prices of exported products.

Export volume fell 2.3% and the prices of exports decreased 0.8%.

Declining export items included rice, rubber, cassava, petroleum, and chemical and petrochemical products.

Increases in exports included passenger cars, air-conditioners, prawns, crabs and lobsters.

Exports to the United States and Australia grew but those to the European Union, China, Japan and other Asean countries fell.

When the export of gold bullion was excluded, the value of exports dropped by 5.0%.

The value of imports amounted to $41.28 billion, falling 7.8%, due to declines in the volume and prices of imports.

The NESDB predicted the GDP would grow 3-3.5% this year on government spending and investment, stimulus, tourism and higher farm incomes.

It expected government spending and investment of 1.64 trillion baht and stimulus worth 100.49 billion baht in the second half of this year.

The agency said it believes the latest blasts will not have an big impact on tourism.

The value of product exports was projected to drop 1.9%, while household consumption was tipped to rise 2.7% overall this year and investment by 3.3%.

AFP reported Capital Economics said in a briefing note Thailand already faces strong headwinds from global growth concerns and the country's waning export competitiveness, adding that trend will be compounded if political instability continues.

"There is a significant risk that the bombings prove to be the start of a new violent phase of Thailand's long-running political conflict," Krystal Tan, an economist at Capital Economics said.

"The big picture is that concerns about political stability will persist until Thailand is able to find a lasting solution to the deep political divide between the urban elite and the poorer rural population," she added.

Benjamin Shatil, Asean economist at JPMorgan, told Reuters looking beyond support from tourism and state spending, there's still "a fragile base for activity in the Thai economy. This points to the possibility of further monetary easing from the central bank if activity softens more noticeably into the second half of the year".

The baht hit its strongest level since July 2015 on the growth report.

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