Economic indicators for March 2013 reflected contractions in domestic spending (-1.1 percent MoM in private consumption, and -0.7 percent MoM in private investment). Sales of automobiles and fuel performed otherwise, though, supposedly because manufacturers are still making deliveries on orders from 2012, and because the market has been bombarded by promotional campaigns. Meanwhile, imports of consumer goods, machinery/parts and capital goods had weakened. Borrowing both by the household and business sectors had slowed as commercial banks took steps toward greater caution in loan approvals.
Exports and manufacturing production, however, regained health by expanding 4.9 percent MoM and 4.1 percent MoM, respectively. Yet, exports and industrial production are still in the early stages of recovery and remain vulnerable to numerous risks that could affect the performance of many businesses, given fragile international markets. In view of this, current growth signals are far from steady.
It is expected that domestic spending could be flagging upon the expiration of provisional supportive factors while challenging conditions are facing export and manufacturing sectors. Thus, we at KResearch are of the view that our economy will slacken over the entirety of 1H13 with GDP growth in 1Q13 expected to be around 5.3 percent YoY. That growth will probably drop further to 4.3 percent YoY in 2Q13.
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