Thailand's 1Q13 gross domestic product (GDP) expanded 5.3 percent YoY, as expected by KResearch, reflecting that the economy has returned to normalcy after growing at a staggering 19.1 percent YoY in 4Q12, driven by a low 2011 base. However, seasonally adjusted, the 1Q13 GDP fell for the first time in five quarters to 2.2 percent QoQ, from a 2.8 percent QoQ growth in 4Q12.
Given this, KResearch projects the Thai economy will grow at perhaps 4.8 percent over 2013, or within 4.3-5.3 percent, assuming that Dubai crude averages USD106/bbl. and major economies, except for the Eurozone, sustain growth momentum, even if fiscal restrictions in the US may weigh on their economy, causing it to grow below 2.0 percent this year.
Meanwhile, Thai domestic consumption continues to be supported by smaller increases in the cost of living than we had expected, leading us to raise our growth projection on private consumption to 3.1-3.8 percent over 2013, beating the 2.8-3.6 percent pace before.
If global economic conditions improve over the remainder of 2013 amid more stable Baht and inflation movements, and the government's budgetary disbursements progress on track, we expect that the Thai economy will recover nicely following the contraction seen in 1Q13.
Nevertheless, the 2012 base and expiration of economic stimuli will present an important test as to whether the Thai economy can sustain growth, particularly when our exports and government spending on various special projects hinge on a combination of factors, including global economic prospects and the Thai government's attempts to inject off-budget investments into the economic system.
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