FPO notes signs of uptick, acceleration since April

The recovery of economic sentiment has gathered steam since April after the government managed to contain the coronavirus outbreak, says a senior official at the Fiscal Policy Office (FPO).

The country's economic uptick is expected to be seen on a quarterly basis, though the National Economic and Social Development Council (NESDC), the Bank of Thailand and the IMF have forecast the economy to shrink 5.5%, 8.1% and 7%, respectively, this year, said Pisit Puapan, director of the FPO's Macroeconomic Policy Bureau.

The NESDC, the state planning agency, is due to release second-quarter economic data on Aug 17. Economic growth shrank 1.8% year-on-year in the first quarter, the deepest contraction since the flood-hit fourth quarter of 2011.

Norabajra Asava-vallobh, director of the FPO's economic and investor relations division, said the regional sentiment index (RSI), a survey of business operators' six-month expectations of the economy conducted by the FPO, showed signs of a pickup in April and accelerated in May after hitting bottom in March.

The government's ability to contain the coronavirus could lend support to higher business confidence in the future for the local economy, he said, adding that the surveys show that business operators believe the economy will bounce back in the near term.

The RSI revealed that business operators across the country, including in the North, the South, the East and the West, were optimistic about the economic outlook, Mr Norabajra said.

Although the economy has yet to rebound to pre-pandemic levels, it has already bottomed out, he said.

The central bank recently predicted a double-digit contraction in the third quarter but said the slump would narrow between the third and fourth quarters.

Asia Plus Securities forecast Thailand's economy to contract by 15% year-on-year in the second quarter because of lockdown measures, with rising contagion risk affecting economic activity on the external front.