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Thai Q4 Growth Surges On Manufacturing Recovery

Thai Q4 Growth Surges On Manufacturing Recovery

Thailand's economy expanded at a stronger-than-expected pace in the fourth quarter of 2012, as manufacturers resumed their normal production capacity after a severe flood in 2011.

Gross domestic product surged a record 18.9 percent year-on-year in the fourth quarter, faster than a revised 3.1 percent growth in the third quarter, data from the National Economic and Social Development Board (NESDB) showed Monday. Economists had expected GDP to increase 15 percent.

On a quarterly basis, GDP rose 3.6 percent, more than double of 1.5 percent increase seen in the third quarter.

Driven by domestic and foreign demand, GDP for the year 2012 grew by 6.4 percent compared to a mere 0.1 percent growth in 2011. Investment also underpinned strong 2012 growth.

The planning agency expects the economy to grow 4.5 percent-5.5 percent in 2013. The central bank in January raised its growth forecast for 2013 to 4.9 percent from the October projection of 4.6 percent.

The non-agricultural sector logged a sharp 21.3 percent growth, which is considered the highest-growth on record, the board said. Manufacturing advanced 37.4 percent in the fourth quarter led by motor vehicle and export-oriented production.

The severe flood in 2011 had disrupted manufacturing supply chains, and in turn hurt automobile production and also caused a shortage of hard disk drives in the global market.

Data showed that mining and quarrying grew 11.9 percent, and output in electricity, gas and water supply climbed 13.2 percent in the fourth quarter. The construction sector expanded 14.1 percent and the wholesale and retail trade grew 7.6 percent.

All other sectors namely hotels and restaurants, transport and communication, financial intermediation, and other services sectors also experienced high growth rates, it said. Meanwhile, the agricultural sector grew only 0.8 percent.

The expenditure side breakdown of GDP revealed that investment registered a double-digit growth of 23.5 percent, reflecting increased spending in construction and machinery and equipment.

The stimulus schemes initiated by the government helped household spending to grow 12.2 percent in the fourth quarter. Similarly, government consumption gained 12.1 percent.

For the external sector, merchandized trade and service balance showed a surplus of THB 27.1 billion, which was a result of a service balance surplus of THB 193.4 billion and a merchandized trade deficit of THB 166.4 billion.

Despite pressure from the government to loosen its monetary policy and to counter the baht's recent appreciation, the Bank of Thailand held its key rates at 2.75 percent for a second consecutive rate-setting session in January.

The next rate-setting session is on February 20. "With inflation running above 3 percent driven by stubbornly high food component inflation, which seems to be where the fiscal stimulus is showing up, we forecast the BOT remaining on hold indefinitely," ING Bank Head of Research, Asia, Tim Condon said.

by RTT Staff Writer

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