Thailand: GDP up 3.3% in Q1, boosted by farming

• May 16, 2017

Thailand’s economy in the first quarter expanded at the fastest pace in three quarters, driven by recovering exports, an improving farm sector and rising private consumption.
But the state planning unit narrowed its 2017 GDP growth outlook to 3.3-3.8% from the 3.0-4.0% range forecast in February, as private investment is unlikely to be as active as earlier expected. The National Economic and Social Development Board (NESDB) reported yesterday GDP grew by 3.3% year-on-year for the January-March period, accelerating from 3% in the previous quarter, thanks to a robust expansion in the farm sector.
After seasonal adjustment, the Thai economy grew by 1.3% in the first quarter from the fourth quarter of 2016.
Porametee Vimolsiri, the NESDB secretary-general, said the agricultural sector expanded at a faster rate after drought conditions eased, while crop prices rose to boost farm income.
The agricultural sector expanded for the third straight period in the first quarter of 2017, up 7.7% year-on-year after growing 3% in the fourth quarter of 2016.
Private consumption grew by 3.2% year-on-year in the first quarter, improving from 2.5% in the fourth quarter of 2016, as farm income, non-farm income and consumer confidence all improved.
Private consumption also accelerated thanks to expenditure on durable goods and services, in line with higher farm income and recovering confidence. In the first quarter of 2017, private consumption expenditure grew by 3.2% year-on-year, up from 2.5% in the previous quarter.
Mr Porametee said exports in the first quarter also expanded thanks to the economic improvement in key trading partners (the US, EU, China, Cambodia, Laos, Myanmar and Laos) and increased commodity prices in the global market.
Export value in the first quarter was US$56.2 billion or 6.6% growth, which was the highest uptick in the past 17 quarters.
The tourism sector expanded by 5.3% in the first quarter, up from 4.9% the previous quarter, with revenue amounting to 712.5 billion baht, up 4.7% year-on-year. Some 481 billion baht stemmed from foreign visitors.
The manufacturing sector decelerated mainly because of the contraction of vehicle production, but export-oriented output expanded as the global economy improved. For the quarter, the manufacturing sector expanded by 1.2%, down from a 2.2% gain in the fourth quarter of 2016.
He said the NESDB maintained its average economic growth forecast at 3.5% this year, slightly adjusting its range to 3.3-3.8% from 3-4% made on Feb 20. The agency cut its total investment growth projection to 4.4% this year from 5.3% as private investment has yet to improve as expected.
Its private investment outlook was cut to only 2% growth from 2.5%, while government investment was slashed to 12.6% growth from 14.4%.
The NESDB did raise its export growth forecast to 3.6% from 2.9% in an earlier forecast because of the economic recovery of Thailand’s key trading partners.
Mr Porametee said economic growth in the second quarter is unlikely to be as high because of a relatively high base in the same period last year of 3.6%.
The government needs to step up state expenditures, infrastructure development and its support for the export sector, he said.
Deputy Prime Minister Somkid Jatusripitak hailed the robust economic performance in the first quarter yesterday, but admitted growth prospects in the second quarter are unlikely to match last year. “We believe overall economic growth will achieve the 3.5% target this year,” Mr Somkid said. “However, the government will focus more on economic and social reforms this year to enhance the country’s sustainable economic growth.”
A source at the Finance Ministry who requested anonymity said the 3.3% first-quarter growth could be attributed to higher than expected export growth coupled with improving state investment, private consumption and farm product prices.
Export momentum is expected to continue in the second quarter as Thai National Shippers’ Council data showed vessel chartering is still strong, the source said.
The mid-year budget worth 160 billion baht will also start to be disbursed from this quarter, the source said.
The NESDB’s narrower economic growth range of 3.3-3.8% could mean the think tank intends to raise its average projection to 3.55% from 3.5%, the source said.
The agency’s new average growth forecast is closer to the Fiscal Policy Office’s forecast of 3.6% for this year.
Don Nakornthab, the central bank’s senior director for the economic and policy department, said the first-quarter growth was better than expected by the central bank, with exports and domestic consumption offsetting tepid private investment. US trade policy, the monetary policy of major economies and the continuity of the Thai government’s investment in mega-infrastructure projects are risk factors that warrant close monitoring, Mr Don said.

Source: http://www.bangkokpost.com/business/news/1250274/gdp-up-3-3-in-q1-boosted-by-farming