Thai economy to slow down in 2007
Wednesday, March 7, 2007
THAILAND'S economy grew a slower-than-expected 0.7 per cent in the fourth quarter, its weakest performance in almost two years, restrained by weaker consumer confidence and investment growth after a bloodless coup in September, the state planning agency said on Tuesday.
Five economists in a Reuters survey had expected gross domestic product (GDP) to rise a seasonally adjusted 0.8 per cent in the fourth quarter.
The National Economic and Social Development Board forecast growth in 2007 would slow to a four to five per cent range from five per cent in 2006.
In December it had projected growth of 4.5 per cent for 2007.
The quarterly expansion was the weakest economic performance since the first quarter of 2005 when GDP fell 0.8 per cent and compared with third-quarter growth of 1.4 per cent, which was revised from 1.5 per cent.
"Economic growth should slow through at least the first half of this year due mainly to political uncertainity which continues to disrupt consumer confidence and investment sentiment," economist Usara Wilaipich at Standard Chartered Bank said.
Household spending grew at a slower annual pace of 2.5 per cent in the fourth quarter, down from 2.8 per cent in the third and 3.3 per cent during the April-June period, the agency's data showed.
"Growth should lose momentum further, signalling that the Bank of Thailand should keep easing monetary policy to facilitate growth," Usara said.
The central bank has cut its policy interest by a combined 50 basis points at the last two meetings of its Monetary Policy Committee and analysts expect it to cut rates by at least another 50 points this year.
Investment growth in the public and private sectors eased to 2.4 per cent in the latest quarter from a year earlier, down from a 3.2 per cent rise in the third quarter, the agency data showed.
Fourth-quarter GDP was 4.2 per cent higher than a year earlier, matching market expectations and slowing from a 4.7 per cent annual rise in the third quarter, the data showed.
The economy grew five per cent in 2006, in line with expectations and after 4.5 per cent growth in 2005.
"GDP forecasts for 2007 are in line with our projection at 4.5-5.0 per cent," said economist Thanawat Patchimkul, head of research at KGI Securities.
"But we expect export growth should be in double digits this year thanks to the government policy of accommodating the export sector."
The agency reduced its 2007 export growth forecast to 7.9 per cent from nine per cent, reflecting its concern about a slowing global trade outlook.
"The baht should be stable this year, while oil prices should not rise too much, which will help ease pressure on inflation and lead to falling interest rates," Thanawat said.
"We expect the economy should bottom out this year and see more growth momentum in the second half," he said.
Analysts say the coup to oust Thaksin Shinawatra helped resolve a political crisis at first, but policy flip-flops by the military-installed government created uncertainty which hurt investment and consumption. Last week's sudden resignation of finance minister Pridiyathorn Devakula, only deepened the economic uncertainties. Reuters
Five economists in a Reuters survey had expected gross domestic product (GDP) to rise a seasonally adjusted 0.8 per cent in the fourth quarter.
The National Economic and Social Development Board forecast growth in 2007 would slow to a four to five per cent range from five per cent in 2006.
In December it had projected growth of 4.5 per cent for 2007.
The quarterly expansion was the weakest economic performance since the first quarter of 2005 when GDP fell 0.8 per cent and compared with third-quarter growth of 1.4 per cent, which was revised from 1.5 per cent.
"Economic growth should slow through at least the first half of this year due mainly to political uncertainity which continues to disrupt consumer confidence and investment sentiment," economist Usara Wilaipich at Standard Chartered Bank said.
Household spending grew at a slower annual pace of 2.5 per cent in the fourth quarter, down from 2.8 per cent in the third and 3.3 per cent during the April-June period, the agency's data showed.
"Growth should lose momentum further, signalling that the Bank of Thailand should keep easing monetary policy to facilitate growth," Usara said.
The central bank has cut its policy interest by a combined 50 basis points at the last two meetings of its Monetary Policy Committee and analysts expect it to cut rates by at least another 50 points this year.
Investment growth in the public and private sectors eased to 2.4 per cent in the latest quarter from a year earlier, down from a 3.2 per cent rise in the third quarter, the agency data showed.
Fourth-quarter GDP was 4.2 per cent higher than a year earlier, matching market expectations and slowing from a 4.7 per cent annual rise in the third quarter, the data showed.
The economy grew five per cent in 2006, in line with expectations and after 4.5 per cent growth in 2005.
"GDP forecasts for 2007 are in line with our projection at 4.5-5.0 per cent," said economist Thanawat Patchimkul, head of research at KGI Securities.
"But we expect export growth should be in double digits this year thanks to the government policy of accommodating the export sector."
The agency reduced its 2007 export growth forecast to 7.9 per cent from nine per cent, reflecting its concern about a slowing global trade outlook.
"The baht should be stable this year, while oil prices should not rise too much, which will help ease pressure on inflation and lead to falling interest rates," Thanawat said.
"We expect the economy should bottom out this year and see more growth momentum in the second half," he said.
Analysts say the coup to oust Thaksin Shinawatra helped resolve a political crisis at first, but policy flip-flops by the military-installed government created uncertainty which hurt investment and consumption. Last week's sudden resignation of finance minister Pridiyathorn Devakula, only deepened the economic uncertainties. Reuters
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