Analysts see slight bump in Q1 growth

• May 11, 2017

Thai GDP possibly grew at a marginally faster rate from January to March than in the previous quarter as state investment and private consumption underpinned recovery momentum despite private investment remaining tepid, economists say.
“The Thai economy is expected to have grown by 3.3% year-on-year in the first quarter, up from 3% growth recorded in the fourth quarter of last year,” said Naris Sathapholdeja, senior vice-president of TMB Analytics, an economic analysis unit of TMB Bank. “The better annual growth rate was supported by solid government investment and stronger-than-expected private consumption.” The National Economic and Social Development Board is due to announce the first- quarter reading on May 15. TMB Analytics estimates 3% quarter-on-quarter GDP growth in the first quarter.
That estimate is based on the assumption that public investment expanded robustly at 16% during the three months to March, compared with 9% growth in the fourth quarter.
Mr Naris said the research house also expects private consumption growth of 3% in the first quarter, supported by a recovery in farm income and strong spending on services.
Nominal farm income grew by 20.1% year-on-year in the first quarter, driven by 7% growth in agricultural production and 12.1% growth in agricultural prices, according to Bank of Thailand data.
“Private consumption accounts for about 50% of the country’s GDP, so strong growth in this sector should help contribute to higher full-year GDP growth,” Mr Naris said.
Although merchandise exports posted a higher-than-expected increase in value for the first quarter, imports also surged, trimming the contribution from exports to GDP growth for the quarter, he said.
According to Bank of Thailand data, Thai merchandise exports grew by 6.6% in the first quarter, while imports expanded at a faster clip of 15.9%.
Mr Naris said private investment is expected to have remained sluggish in the January-to-March quarter. TMB Analytics forecasts that private investment bounced back, growing slightly at 1.5% for the quarter from a 0.4% contraction recorded in October to December.
Mr Naris said the tourism sector remained one of the main engines of the economy in the first quarter but is unlikely to achieve strong growth because of a high-base effect.
Don Nakornthab, senior director of the Bank of Thailand’s macroeconomic and monetary policy department, said the Thai economy is expected to have grown by more than 3% in the first quarter. “Overall economic activity in the first quarter of 2017 continued to expand, driven by a broader expansion in exports and accelerated private consumption, stemming from increased spending on durable goods and higher farm income,” Mr Don said.
The Bank of Thailand recently maintained its Thai economic growth forecast at 3.4% for the full year and estimated growth of 3.6% in 2018.
“We expect the economic recovery momentum to continue through the first quarter and forecast 3.5% year-on-year growth in the period,” said Tim Leelahaphan, an economist at Maybank Kim Eng Securities Thailand.
He said most economists expect public investment and the tourism sector to be the main engines driving Thai economic growth this year.
“But the overlooked engines, which are private consumption and merchandise exports, ended up beating the market’s expectations and these two factors are expected to cause an upward revision of the full-year growth consensus to a little bit more than 3%,” Mr Tim said.
He said Maybank Kim Eng expects private consumption to have grown by more than 3% in the first quarter, up from 2.5% in the fourth quarter of 2016.
“People have cast doubts over the sustainability of the recent export recovery, as it was driven by improving agricultural prices, but they should consider that the recovery was also supported by manufacturing exports, whose recovery started last year,” Mr Tim said. Maybank Kim Eng appears optimistic, predicting GDP growth of close to 4% this year.
Meanwhile, Credit Suisse sees mild GDP growth of 3.1% in the first quarter, underpinned by exports and consumption but constrained by investment.
“We remain comfortable with our 3.3% GDP growth projection this year and that the Bank of Thailand will hold the policy rate at 1.5%,” Credit Suisse said in its latest report. “Upside risk to our export view is somewhat balanced by a slower-than-expected uptick in investment.”

Source: http://www.bangkokpost.com/business/news/1247366/analysts-see-slight-bump-in-q1-growth