Thailand’s growth slows, exports hurt
published : 19 Nov 2012 at 10:02
writer: Bloomberg News
Thailand's growth slowed in the third quarter as cooling global demand hurt the country's exports, even as signs of a recovery in China and the United States signal the economy may have bottomed.
Gross domestic product increased 3% in the three months through September from a year earlier, after expanding a revised 4.4% in the previous quarter, the National Economic and Social Development Board said in Bangkok on Monday. The median of 13 estimates in a Bloomberg News survey was 3%.
Prime Minister Yingluck Shinawatra extended fuel subsidies and introduced wage increases after last year's floods to spur domestic demand and offset falling exports. The central bank unexpectedly cut its benchmark rate last month as "insurance" against uncertainties, even as some policy makers in the region signal growing confidence about growth prospects next year.
"The economy hit bottom in the third quarter and should improve going forward," Santitarn Sathirathai, a Singapore- based economist at Credit Suisse Group AG, said before the report. "The economic stimulus by key nations has started to take effect, and that should boost confidence and get people to start spending again after holding back earlier."
China's factory output and retail sales accelerated in October, while consumer spending and an improving housing market are leading U.S. expansion. Growth in most economies in Asia will probably rebound in 2013, Asian Development Bank President Haruhiko Kuroda said last week.
The Thai baht rose 0.1% against the US dollar as of 9.36am in Bangkok. It was one of the top gainers last quarter among the 11 most-traded Asian currencies tracked by Bloomberg.
Yingluck's government raised minimum wages nationwide in April and announced another round of increases from the beginning of 2013. More than two trillion baht ($65 billion) in investments in infrastructure and water-management projects is planned over the next seven years to boost growth and prevent a repeat of last year's disaster, which killed more than 700 people and cost the economy an estimated 1.4 trillion baht.
The central bank last month lowered its GDP forecast for next year to 4.6% from 5%, while maintaining its prediction for this year at 5.7%. Governor Prasarn Trairatvorakul said the unexpected cut is not a signal that interest rates are on a downward trend and that monetary policy space should be used "wisely" because of uncertainties ahead.
Thailand's overseas shipments unexpectedly climbed for the first time in four months in September, and the government said it expects export growth to accelerate in the last three months.
Nissan Motor Co, Japan's second-largest carmaker, this month announced a plan to invest 11 billion baht to build a second factory, while Toyota Motor Corp said it expects sales in Thailand to increase 72% this year to a record.
Thailand's economy, the biggest in Southeast Asia after Indonesia, grew 1.2% last quarter from three months earlier, compared with a revised 2.8% increase in the previous period. The median forecast in a Bloomberg News survey was for a 0.3% decline.