The Thai economy expanded at a faster-than-expected rate in the second quarter as the country's recovery from last year's floods helped boost investment and consumption.
However, the government trimmed the growth forecast for the year as exports are expected to grow at a weaker rate going forward, owing to the slowdown in the global economy.
Gross domestic product rose 4.2 percent from the previous year, data from the National Economic and Social Development Board (NESDB) revealed Monday, beating expectations for an expansion of 3.1 percent.
The annual increase follows an upwardly revised 0.4 percent growth in the first quarter, which was earlier reported as 0.3 percent rise.
According to the economic planning agency, the main driving factors of growth were the advancement in private consumption expenditure and investment, and the recovery of the production and industrial and services sectors.
Though export sector continued to contract, there was a modest improvement compared to the first quarter, the agency said.
The GDP grew 3.3 percent on a quarterly basis. This was much slower than the revised 10.8 percent expansion recorded a quarter ago. The first quarter growth rate was revised from 11 percent reported earlier.
The government projects the economy to grow 5.5-6 percent this year, down from the 5.5-6.5 percent estimated previously. The growth outlook for exports was trimmed sharply to 7.3 percent from 15.1 percent. Private consumption and investment are projected to grow by 4.8 and 11.3 percent respectively, this year.
In the second quarter, consumer spending expanded 5.3 percent annually, faster than 2.9 percent rise in the previous quarter, while investment growth accelerated to 11.8 percent annually from 9.2 percent in the first quarter.
Due to recovery in the production capacity of flood affected industrial sector, manufacturing expanded 2.7 percent following a contraction of 4.3 percent in the preceding quarter.
Inflationary pressures and oil prices are expected to remain low, which may support expansionary monetary policy, the planning agency said. The headline inflation is expected to be 2.9 -3.4 percent this year.
At the same time, the NESDB pointed out that there are still risks and constraints facing the economy including the slow recovery of the world economy as the European crisis remains uncertain and the delay in government budget disbursement and implementation of major public investment projects.
Earlier this month, Bank of Thailand revised down its forecasts for economic growth and inflation and said downside risks and uncertainty emanating from the global economy are likely to increase this time. The bank now expects GDP to expand 5.7 percent in 2012 and 5 percent in 2013.
by RTT Staff Writer
For comments and feedback: email@example.com