The latest economic indicators for April 2009 released by the Bank of Thailand (BoT) reflected that domestic spending, as evidenced from investment and consumption continued to contract in line with economic sluggishness and poor political atmosphere in April. Meanwhile, exports experienced deeper contraction, resulting in a lower trade surplus. However, positive signs in manufacturing production continued, as seen from smaller declines in Manufacturing Production Index for four months in a row.
The latest BOT economic indicators for April reflected continued weakness in domestic spending. The government's economic stimulus efforts and the easing financial conditions are therefore needed. Meanwhile, maintaining the Baht's stability in line with regional currencies is still necessary for Thailand's exports given that positive signs from our major trade partners remain far from healthy.
It is likely that positive signs will emerge in some economic indicators, especially those reflecting public spending on the government's stimuli, and/or increased production plus private spending. However, signs of economic recovery should be carefully assessed, especially their impact on a sustained economic turnaround.
Meanwhile, domestic political stability and confidence toward the economic growth, as well as the timing of any significant economic rebound should be closely monitored. KASIKORN RESEARCH CENTER (KResearch) preliminarily estimates that the Thai economy in 2Q09 may continue to shrink, albeit at a lesser degree than in 1Q09. We therefore project that the Thai economy in 2Q09 may contract 5.6-7.0 percent, against the 7.1-percent contraction in 1Q09, which was the worst performance in 10 years.