Thailand lowered its full-year growth outlook after weaker domestic demand and exports weighed on economic activity in the first three months of the year.
Gross domestic product expanded 5.3 percent year-on-year in the first quarter of 2013 compared to an upwardly revised 19.1 percent growth in the fourth quarter of 2012, the National Economic and Social Development Board (NESDB) said Monday. The latest growth was also weaker than the 6 percent expansion expected.
The planning agency revised down its economic growth forecast for 2013 to 4.2-5.2 percent from 4.5-5.5 percent forecast in February. Exports are expected to grow 7.6 percent this year, while private consumption and total investment is seen increasing by 3.3 and 7.9 percent, respectively.
After seasonal adjustments, GDP contracted 2.2 percent on quarter-on-quarter basis.
The NESDB said that the delay in global economic and export price recovery, strong currency, high base effect and the fading impact of government's stimulus policies posed downside risk to economic outlook.
Weak GDP data boosts the case for the central bank to reduce interest rate. The Bank of Thailand, however, retained its interest rate at 2.75 percent for a fourth straight time in April, resisting government calls for a rate cut to cool baht's gains.
"Thailand's economy struggled last quarter, but a modest rebound is likely over the coming quarters," said Daniel Martin, an economist at Capital Economics. "Against this backdrop, we think the central bank will continue to resist pressure to cut rates," the economist said.
In the first quarter, annual rate of growth in private consumption eased sharply to 4.2 percent from 12.4 percent in the fourth quarter of 2012, data showed today. Investment growth decelerated to 6 percent from 22.9 percent in the previous quarter.
Export growth moderated to 4.5 percent from a solid 18.2 percent expansion in the final quarter of last year. The slower expansion can be "attributed to sluggish recovery of global demand and appreciation of Thai baht," the planning agency said.
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