Thai NESDB reports clear rebound

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Thai NESDB reports clear rebound 
Bangkok Post: 24 Nov 2009
NESDB reports clear rebound
GDP shrinks by only 2.8% in third quarter

The Thai economy fell by 2.8% year-on-year in the third quarter, according to data from the National Economic and Social Development Board.

The economy rose by 1.3% in the third quarter from the previous quarter, a slowdown from the 2.2% quarter-on-quarter growth in the second quarter.

But economists said the data released yesterday was better than expected and reaffirmed the economy was continuing to improve.

A 4.9% year-on-year contraction was posted in the second quarter, compared with a 7.1% decline in the first.

"[The data] shows clear signs of economic recovery. Other economic indices are also pointing to recovery," said NESDB secretary-general Ampon Kitti-ampon.

The NESDB revised its full-year forecast to a 3% contraction for 2009, with growth of 3% to 4% for 2010.

Mr Ampon said five factors would support the economic recovery through 2010: higher industrial capacity utilisation, falling unemployment, a rebound in tourism, increased exports and higher global commodities prices.

Capacity utilisation in September was 64.7%, compared with 54.8% reported at the height of the global recession in February. Unemployment in September stood at 1.2% or 450,000, compared with 2.4% or 878,900 in January.

The tourism sector, hit hard by both the global downturn and Thailand's political troubles earlier this year, rebounded to 48.6% hotel occupancy in September compared with 40.8% in June.

Exports meanwhile posted an 8.3% year-on-year contraction in September, compared with a 26.5% decline in May, with growth likely to resume by the year-end thanks to higher demand and prices.

Mr Ampon said the Thai economy could post a contraction of less than 3% for the full year if fourth-quarter figures post a rise of 2.7% to 3.2% from the same period last year, a scenario that the NESDB forecast as having an "85% possibility".

For 2010, the government's 1.43-trillion-baht Thai Khem Kaeng investment programme and continued gains for the global economy will be the main drivers of domestic growth.

"We see economic growth reaching 3% to 4% in 2010, led by government spending and the global recovery. Consumption is expected to rise 2.5% year-on-year, private investment 3.8% and exports by 10%," Mr Ampon said.

Inflation, as measured by the consumer price index, is projected at 2.5% to 3.5% in 2010 compared with a 0.9% decline this year.

Mr Ampon said the inflation forecast for 2010 was based on oil prices averaging $75 to $85 next year.

"The government investment projects is the key to supporting 3% to 4% growth next year as it will help lead a revival in private investment," Mr Ampon said.

The legal deadlock over new industrial investments in Rayong's Map Ta Phut area is another key factor affecting the economy's growth, he said.

Hundreds of billions of baht in new investment at the Map Ta Phut industrial zone have been put on hold due to environmental concerns and legal questions on whether existing and new licences properly followed terms of the 2007 constitution.

Thanomsri Fongarunrung, an economist at Phatra Securities, said the third-quarter data showed a clear rebound, particularly in sectors tied to external trade.

The fourth quarter is likely to continue to improve, although investment and domestic demand remained relatively weak, she said.

The global economy remains a key risk factor for 2010, as a slowdown would affect exports and the domestic economy, she said.

Writer: Darana Chudasri

http://www.bangkokpost.com/business/economics/27999/nesdb-reports-clear-rebound