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30 Dec 2010

Thai Economy

November Economic Indicators: Improving Domestic Spending and Exports (Business Brief No.3019)

Economic indicators for November 2010 reflected a recovery in the Thai economic activities as seen in many sectors after pausing somewhat in October due to severe flooding that hit many provinces in Thailand. Indicators for consumption, private sector investment, industrial production, crop production and exports all returned to grow. If domestic spending and exports rose during December – amid the New Year holiday, KResearch estimates that the 4Q10 GDP will grow at least 3.0 percent YoY. Although our revised projection is better than our former forecast of 2.0 percent, it seems that we are still on the path to recovery in continuation from 2Q10.
For our outlook on the Thai economy in 2011, KResearch's economic projection remains unchanged at 3.5-4.5 percent growth. Meanwhile, positive news in the US economy and major Asian trade partners may boost Thai exports in 2011, although we could still face decelerating growth. In addition, we should monitor the government's new economic action program that is expected to take effect in early-2011, because it should help reduce the cost of living and increase consumer purchasing power. KResearch, therefore, will be monitoring this carefully before any official revision in our projection for 2011.

However, there are some risks that should be monitored over coming months, such as spending and investment by the private sector that may depend on the domestic political situation. Meanwhile, the global economy should be watched, especially for positive news, particularly in the US economy that may achieve satisfactory growth due to Bush-era tax incentives, plus the Chinese government's moves to forestall inflation and asset price bubbles. Also, higher global oil prices may affect inflation and increase costs for manufacturers.

Thai Economy