Based on the latest economic figures reported by the Office of the National Economic and Social Development Board (NESDB), KResearch has analyzed the Thai economic trend, with key points summarized as following:
§ Although the Thai economy grew by 6.7 percent YoY, the seasonally-adjusted QoQ GDP figure shrank for second consecutive quarter. This situation is sometimes called a ‘technical recession'. Given the 4Q10 situation, rising economic risks can be seen, such as risks from the apparent global economic deceleration, Baht appreciation and severe damage from flooding nationwide.
§ Because of the above concerns, our economic forecast remains unchanged. It is possible that seasonally-adjusted QoQ growth in 4Q10 may contract for third consecutive quarter, so economic growth in overall 2010 may be at 7.0 percent or slightly higher. Meanwhile, if relevant risks improve, it is possible that Thailand's 2010 economic growth may meet NESDB's forecast of 7.9 percent.
§ As for the outlook, economic stimuli will likely subside somewhat, as seen from the export slowdown that may dampen economic growth. In addition, domestic consumer spending tends to decelerate, so authorities may face some challenges of implementing policy in 2011. KResearch expects that growth may decelerate to 3.5-4.5 percent (in line with the NESDB forecast). Meanwhile, exports may decelerate to single-digit growth which may affect the economic growth, so we may depend more on domestic consumption and investment that is expected to rise further.
Thailand Economic Growth Estimate, 2010-2011
|
Units: %YoY or otherwise indicated
|
2009
|
2010
|
2011
|
|
GDP Growth
|
-2.3
|
7.0
|
3.5-4.5
|
|
Cost of Brent Oil (US Dollars/Barrel)
|
61.6
|
78.5
|
82.5-90.0
|
|
Private Consumption
|
-1.1
|
3.7
|
3.0-3.5
|
|
Investment
|
-9.2
|
10.2
|
7.5-9.0
|
|
Budget Deficit (%GDP)
|
-5.8
|
-3.2
|
-3.8 to -5.0
|
|
Exports
|
-14.0
|
27.0
|
6.0-10.0
|
|
Imports
|
-25.2
|
35.0
|
9.0-13.0
|
|
Trade Balance (US Dollar Bn.)
|
19.4
|
14.0
|
7.3-10.2
|
|
Current Account Balance (US Dollar Bn.)
|
20.3
|
14.2
|
8.3-11.7
|
|
Headline Inflation
|
-0.9
|
3.3
|
2.5-4.0
|
|
Core Inflation
|
0.3
|
0.9
|
1.8-3.0
|
|
Unemployment (Persons x 1,000)
|
571
|
420.0
|
390-420
|
|
Unemployment Rate (% of labor force)
|
1.5
|
1.1
|
1.0-1.1
|
Source: BOT, NESDB, Ministry of Commerce
Estimates by KResearch
Challenges for Thai authorities in 2011 will include the need to sustain economic growth, control inflation and maintain forex rate stability. The BOT may adjust their policy rate to enhance price stability and launch other measures to balance capital flows and maintain Baht stability. Meanwhile, the government should make efforts to ease urgent problems, such as assisting flood victims, easing inflation and helping businesses affected by the Baht appreciation. In addition, the government should implement strategies to enhance the competitiveness of the private sector so that they can brace for tough competition in the global arena amid the Baht appreciation trend and more comprehensive trade liberalization. Trade liberalization is expected to intensify, with more product categories to be included on the list, as we are about to become a member of the ASEAN ECONOMIC COMMUNITY (AEC) in 2015.
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