Economic indicators that have been released recently show that Thailand's GDP in 2Q09 will likely improve over 1Q09, pointing out that Thailand has bottomed out from its recession. This development is consistent with other Asian countries as well as some developed countries such as Japan, Germany and France. Despite some leading countries like the US and many European nations not having fully passed out of recession, their economies are decelerating slower.
These positive signs indicate that the global economy is recovering and the additional economic stimulus measures launched by the Thai government called the ‘Strong Thailand Plan, 2012' are expected to boost the Thai economy to recover steadily in 3Q09. In particular, the recovery of the world's major economies is projected to support exports in 2H09 that may see a single-digit contraction, versus the high contraction of 23.5 percent in 1H09.
KASIKORN RESEARCH CENTER (KResearch) expects that the seasonally-adjusted GDP for 2Q09 will show growth of around 2.3 percent QoQ, which would be the first growth in three quarters. However, over-year, we expect that the GDP will still be highly contracted at around 5.1 percent, but that would be less than the 7.1 percent shrinkage in 1Q09, which was our worst contraction in 10 years.
Further on, the Probability Index for Economic Recovery developed by KResearch points out that the Thai economy may recover between July and September 2009, the probability of that being measured at around 74 percent, which is higher than the 63 percent average estimated in the preceding month. We may say that the economic recession is approaching an end, and the Coincidence Economic Indicators may resume growth over the next 3 months.
KResearch views that the driving force of an improving export sector and the Thai government's economic stimuli will help boost the Thai economy in 3Q09, thereby likely to show continuous recovery, despite some domestic negative factors, such as the outbreak of H1N1 flu and the political situation that has affected tourism and consumer spending. KResearch views that the Thailand's GDP in 3Q09 will show growth QoQ while having a decelerating contraction YoY.
The major economic risks over the remainder of 2009 will include the possibility of an unstable global recovery due to uneven national economic performance in each country with varying degrees of success in their stimulus packages next year. A stable recovery will be judged as being when unemployment rates drop significantly. In addition, the H1N1 flu outbreak is still a major domestic risk. Although the spread of this contagion has become less severe in Bangkok Metropolitan Region, our business center, it will need to be monitored. Meanwhile, political discord will likely worsen in 4Q09. As a result, KResearch has decided to maintain our projection for the Thai economy in 2009 at a -3.5 to -5.0 percent. The upper range of our projection is based on continuous economic growth, and the lower range takes into account any worsening of the aforementioned risks.
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