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26 May 2008

Thai Economy

GDP, 1Q08: Growing 6.0% as Expected, But Bleak Outlook (Business Brief No.2177)

  • The National Economic and Social Development Board (NESDB) has reported that the 1Q08 GDP grew 6.0 percent over-year and 1.4 percent Q-o-Q, which is in line with the projection made by KASIKORN RESEARCH CENTER (KResearch). This expansion was underpinned by a low base effect in comparison with last year and higher farm produce prices.
  • Meanwhile, the NESDB has maintained their economic projection for this year intact in a range of 4.5-5.5 percent - unchanged from before. However, they revised upward their inflation forecast for 2008 to a range of 5.3-5.8 percent, from a previous 3.2-3.7 percent due to higher oil and commodity prices as well as wage increases.
  • Exports are projected to expand 13.3 percent, while imports are expected to rise to 22.0 percent, which will put the current account balance in surplus to USD6.0 billion in 2008, according to the NESDB.
  • Despite healthy economic performance in 1Q08, KResearch forecasts that consumer spending and Thai economic growth may be hampered by inflation in 2Q08. This may result in a significant economic slowdown from 1Q08. On a Y-o-Y basis, however, the GDP may rise 5.0 percent due to the low base of last year.
Thai economic growth in the following quarters will likely be overshadowed by accelerating inflation in 3Q08. Amid the immediate political confrontation which may lead to violence, the confidence of the private sector – especially foreign investors – may be adversely affected. On the plus side, however, the domestic economy will be fortified by increases in farm produce prices, which will be a boost for farm income and other related sectors. KResearch therefore forecasts that Thai economic growth may average some 4.9 percent in 2008, close to the growth of 4.8 percent in 2007.

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