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30 Jun 2011

Thai Economy

Domestic Consumption Recovering before General Election (Business Brief No.3136)

คะแนนเฉลี่ย
Domestic spending, notably consumption and investment all exhibited positive signs in May 2011 after remaining stagnant in April when economic indicators reflected the impact of component shortages in Thai industries relying on imports from Japan. Domestic spending on many items, except for automobiles, was recovering in tandem with increased spending during the leading up to the July 3 general election, helping to offset revenue shortfalls from slowing momentum in the export sector. Economic data for May 2011 is summarized below:
- Private consumption rebounded over April by 0.9 percent MoM, led by higher value-added tax (VAT) collections, consumer product imports and power consumption, whereas sales of automobiles and petroleum products contracted in line with the decline in automotive production.
- Private investment expanded by 0.4 percent MoM, consistent with growth seen in all components, including capital goods imports, cement sales and construction permits granted by municipalities. However, commercial vehicle sales had contracted following decreased automobile production.
- Export value was seen to have contracted for two straight months by 1.8 percent MoM, as a result of the declines in the value and volume of exports. However, shipments of agricultural products continued to expand at a high rate of 16.8 percent MoM amid the slowdowns seen in other categories.

We at KResearch are thus of the view that the Thai economy in 2Q11 will probably grow at about 3.0 percent YoY, which would be at the same rate for 1Q11 amid rosier prospects seen for the Thai economy, especially in domestic spending that became apparent in May prior to the general election, while easing production constraints in the automotive industry during May will alleviate the pressure on Thai industry overall. Thus, it is likely that economic activity during 2Q11 will do better than in 1Q11. For 2H11, KResearch expects that a low base of effect from last year will help support the Thai economy to grow in a range of 3.4-4.8 percent YoY, pending downside risks from political instability after the election, a deteriorating global economic recovery, spiraling inflation, higher production costs and exorbitant energy prices.

Thai Economy