Thai economy grew 6.7% in 3rd quarter

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Thai economy grew 6.7% in 3rd quarter 
: 22 Nov 2010
Thailand's Economy Grew 6.7% in Third Quarter From Year Earlier
source: Bloomberg.com By Suttinee Yuvejwattana
Nov 22, 2010 9:43 AM GMT+0700

Thailand’s economy grew at the slowest pace in three quarters as exports eased, justifying the central bank’s decision to refrain from a third straight interest-rate increase last month.

Gross domestic product rose 6.7 percent in the three months through September from a year earlier, the government said in Bangkok today. That compared with the 7.2 percent median estimate in a Bloomberg News survey of 15 economists. The economy grew a revised 9.2 percent in the second quarter.

The Bank of Thailand in October kept its benchmark rate at 1.75 percent after raising it in July and August as Asia’s policy makers sought to stem currency gains and shield their economies from a slowdown in global expansion. Still, the central bank may need to weigh the need to support growth against the risk that inflation will accelerate as it prepares to review monetary policy on Dec. 1.

“Although we do expect the Thai economy to grow more slowly from here, it’s worth noting that the growth is seen to remain fairly robust,” Wellian Wiranto, an economist at HSBC Holdings Plc in Singapore, said before the release. A quarter-percentage- point rate increase next month would be “a good balance between nipping any potential future inflationary pressure in the bud and the need to also guard against unexpected growth slowdown.”

Central bank Governor Prasarn Trairatvorakul said Nov. 18 that monetary policy, while focused on inflation, will be flexible amid rapid changes in the global situation. World food prices climbed to the highest level in more than two years in October, according to the United Nations’ Food and Agriculture Organization.

Export Growth

Thai export growth slowed to 15.7 percent in October, the slowest pace in a year, a report showed last week, and the baht has appreciated more than 11 percent this year, the best performance in Asia, raising concern that Thailand’s goods may become more expensive relative to its regional rivals.

Prime Minister Abhisit Vejjajiva said Nov. 12 he is “still worried” about gains in the baht, which earlier this month strengthened to the highest level in 13 years. General Motors Co., Ford Motor Co. and Siam Cement Pcl are among companies that cited the currency as a threat to shipments from Thailand, an exporter of cars, rice and electronics.

The U.S. Federal Reserve said this month it will purchase $600 billion of Treasuries to spur the world’s largest economy, a move that policy makers from Asia to South America said could depress the dollar and spark capital flight to emerging markets.

Capital inflows remain a long-term risk and recent declines in the currency may be “short-term,” Prasarn said last week. The baht has declined 0.1 percent in the past week, according to Bloomberg data.

Flood Impact

The economy shrank 0.2 percent in the third quarter from the previous three months, the government said today. That compared with the median estimate for a 0.3 percent contraction in a Bloomberg News survey of 11 economists.

Prasarn said last week he expected this year’s growth to be “more than 7 percent” even after floods hurt crops. Thai consumer confidence fell for the first time in six months in October as the baht surged and the nation’s worst floods in five decades devastated agricultural land, a report showed this month. Abhisit has said the flooding may curb Thai GDP growth this year by 0.3 percentage point.

The central bank has said that private investment has recovered and will help partially offset weakening shipments. Amata Corp., the nation’s biggest industrial-estate developer, said Nov. 15 foreign investors have returned to invest in Thailand as tensions eased after the nation’s worst political violence in 18 years, which occurred in April and May.

“Next year may be even better for investment,” said Viboon Kromadit, Amata’s chief operating officer. “If we can maintain political stability, everything will be just fine.”

http://www.bloomberg.com/news/2010-11-22/thai-gdp-expands-at-slowest-pace-in-three-quarters-as-global-demand-eases.html