BoT: Subtle signs of an uptick
External risks still hinder recovery
Thailand’s economic recovery momentum continued slowly in the third quarter, driven mainly by private sector consumption and investment, as external downside risks still cloud the country’s growth outlook, says the Bank of Thailand.
Roong Mallikamas, a senior director of the macroeconomic and monetary policy department, said economic indicators in September suggested Thailand’s economic conditions were supported by private consumption and investment coupled with a slight pickup in private sector confidence.
“There were positive signs near the end of the third quarter compared with July and August,” she said.
The Private Consumption Indicators (PCI) expanded by 0.4% year-on-year in September, up from August’s contraction of 1.4%. The PCI declined by 1.1% year-on-year in the third quarter, up from a contraction of 1.2% in the second quarter.
The Private Investment Indicators (PII) grew by 1.1% year-on-year in September, down from 2.1% a month earlier. The PII expanded by 1.1% year-on-year in the third quarter, up from second quarter growth of 0.4%.
September tourist arrivals grew 8.7% year-on-year, down from 24.7% in August because of the impact of the Erawan Shrine bombing. Arrivals grew by 24.3% year-on-year in the third quarter, down from 37.6% in the second quarter.
“Quarter-on-quarter GDP growth in the third quarter could be better than the second quarter, in line with the central bank’s projection,” said Mrs Roong.
Thailand’s economy grew by 0.3% and 0.4% quarter-on-quarter on a seasonally adjusted basis in the first and second quarters, respectively. The economy grew by 2.9% in the first half of 2015.
She said the fragile global economic recovery and effects from China’s economic slowdown taking a toll on Asean economies were the main downside risks to Thailand’s economic recovery.
Thailand’s current account registered a surplus of US$1.6 billion in September, down from August’s surplus of $2.6 billion, because of low merchandise imports.
The country’s capital account posted a deficit of $2.9 billion in September, up from a deficit of $7.4 billion in August, because of capital outflows as Thai businesses invest abroad and foreign investors sell off Thai equities in anticipation of a US Federal Reserve rate rise and concerns over the Chinese economy.
Sarun Sunansathaporn, an economist at the Bank of Ayudhya’s research department, said a robust increase in public spending and substantial contribution from net exports to GDP growth, owing to the large swing in the current account surplus, could overshadow sluggish domestic demand in the third quarter.
“We project third-quarter GDP growth of 0.6% quarter-on-quarter on a seasonally adjusted basis and 2.4% growth year-on-year, anticipating the Monetary Policy Committee will keep its policy rate unchanged at 1.5% next week,” he said.