Growth steady as car sales rise and industry optimistic
An expected slowing of GDP growth during the second quarter did nothing to dent industry sentiment, which hit a five-year high in July and domestic car sales, which surged by over 25 percent, as most economic indicators support an optimistic view of the Thai economy despite modest quarterly fluctuations.
Thailand’s economy grew by 4.6 percent during the second quarter of 2018, which was slightly higher than the 4.5 percent forecast by a Reuters poll of analysts, but lower than the 4.9 percent registered for the first quarter. Several analysts said they believed Thailand’s export growth would slow in coming quarters, but not because of any lack of competitiveness on Thailand’s part. They expect trade frictions involving other countries to act as a drag on global growth and demand and that would affect the Kingdom’s prospects.
Exports growth remained robust, nonetheless, in July, the first month of the third quarter. The Commerce Ministry reported last week that customs-cleared exports rose 8.3 percent year-on-year in July, reeling in $20.2 billion, after growing 8.2 percent in June and 11.4 percent in May. That represented the 17th straight month of export growth, and the totals for the first seven months of this year were the highest in seven years.
The performance of the economy pushed the Thai Industries Sentiment Index to its highest level in 62 months in July, according to the Federation of Thai Industries, which publishes the results.
“The purchasing power of the agricultural sector was reflected in a growth of overall orders and sales nationwide, in particular, cars, motorcycles, machinery, steel products and electrical appliances,” said Supant Mongkolsuthree, chairman of the Federation.
Car sales have been surging. Domestic car sales rose 25.7 percent in July compared to the same month a year earlier, reaching to 81,946 units, after a 25.9 percent increase in June, the Federation of Thai Industries said. Car sales are an indicator of how confident consumers are in the outlook for the economy and their own earnings.
The business community still has some reasons for caution and concern. Rising oil prices, the possibility of flooding during monsoon season, and recent signals by the central bank that interest rates may soon start to rise were all mentioned by respondents to the Federation survey.
“We must also prepare a backup plan for a global trade war,” Supant said.