Second quarter growth exceeded expectations
Thailand’s economy expanded at a rate of 3.5 percent in the second quarter of this year, according to the National Economic and Social Development Board, slightly surpassing expectations of many analysts and adding to the growing optimism that the economy will continue to accelerate despite lukewarm demand in many markets for exports, the traditional driver of Thai economic growth.
The National Economic and Social Development Board (NESDB) predicted the economy would grow between 3 and 3.5 percent this year driven by government spending and investment, stimulus measures, tourism and higher farm incomes.The 3.5 percent gross domestic product (GDP) growth in the second quarter outpaced the 3.3 percent median estimate in a Bloomberg News survey of 22 analysts. GDP grew 0.8 percent from the previous three months, compared with a 0.5 percent median estimate.
The NESDB is Thailand’s national economic planning agency, and authors the Kingdom’s five-year economic and social plans. The agency said it expects that government spending and investments totaling $46 billion, and stimulus measures valued at $28 billion, would keep the economy growing at a healthy rate through the end of 2016, and serve as a pump primer for private investment.
Other factors that would support solid growth include increases in household spending, exports of services, and additional government non-infrastructure investment. Household spending rose 3.8 percent, up from 2.3 percentduring the first quarter of this year, as spending on durable goods, particularly passenger cars, rose for the first time in 13 quarters. Durable-goods spending was up by 4.8 percent, compared with a drop of a 26.6 percent in the previous quarter.
The growth report sent the baht rising to a one-year high in currency trading markets, with the Thai currency gaining 0.2 percent against the dollar for an exchange rate of 34.7 baht to the greenback.
The NESDB expects the government will disburse a further $3.18 billion in stimulus funds in the second half, after doling out $6.2 billion in the first six months. With farm incomes having expanded for the first time in 10 quarters, the agency also expects that will help spur a recovery in domestic spending.
Tourist arrivals, which have gained in economic importance because of the slump in exports, rose 8.2 percent from the same period last year to 7.55 million, according to the Bank of Thailand.
NESDB Secretary-General Porametee Vimolsiri said the recent bombings at tourist areas in Southern Thailand was a one-time event that should not hurt the economy in the long term. “We expect the government to keep the situation under control. We don’t count this as a risk factor for the second half. Tourists have started to return to affected areas and things are getting back to normal,” he said.