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Thailand: Growth expected to hold steady
Economic growth in the second quarter is expected to be close to the first quarter’s reading of 3.3% and accelerate to 3.7% in the second half, says a senior Bank of Thailand official.
“Some economic engines showed stronger growth than expected but I, personally, think that GDP growth in the second quarter was roughly the same as in the first quarter,” said Don Nakornthab, senior director in the macroeconomic and monetary policy department at the central bank.
“If the GDP growth in the second quarter meets the 3.3% growth in the first quarter, the Thai economy can be expected to grow stronger at 3.7% in the second half to make the central bank’s full-year GDP forecast of 3.5% reachable.”
Mr Don said that private consumption is expected to accelerate in the second half while the low-base effect of tourist arrivals in the fourth quarter last year from the crackdown on illegal tour operations will help boost growth in the tourism sector this year.
However, merchandise exports, which grew stronger and broader-based in the second quarter, are expected to slow down in the second half of this year, he added.
On a balance-of-payments basis, Thai merchandise export totalled UScopy12 billion (3.74 trillion baht) in the first half of this year, growing 7.4% year-on-year, while the growth in the second half is expected to be only 2.7% due to the high base during the same period last year.
The Bank of Thailand early last month lifted the country’s outbound shipment outlook to 5% this year from 2.2% predicted in March.
He said that the baht appreciation is not expected to greatly diminish Thai exporters’ competitive edge as the currency’s real effective exchange rate — adjusted for inflation and against a range of currencies of its main trade partners — rose only slightly.
“However, the stronger baht could affect the profits of exporters as they will have to convert revenue from dollars into baht,” said Mr Don.
In a related development, Mr Don said the Thai economy continued to expand in June, mainly supported by the broad-based expansion in merchandise exports and continued recovery in the tourism sector.
On a balance-of-payments basis, Thai merchandise exports amounted to copy9.8 billion in June, up 7.6% year-on-year. Without gold exports, the value was copy9.4 billion, up 9.9%.
Mr Don said that despite the strong recovery in exports, manufacturing production remained flat mainly due to subdued domestic consumption.
June’s manufacturing production index (MPI) dropped 0.2% while the MPI for the second quarter decreased 0.1%, down from 0.3% growth in the first quarter.
Mr Don said private investment contracted slightly in June, with indicators dropping 0.2%, due largely to the continued slowdown in the construction sector while investment in machinery and equipment steadily grew.
Source: http://www.bangkokpost.com/business/news/1297623/growth-expected-to-hold-steady