Thailand downgraded its growth forecast for the year due to slower-than-expected economic growth in the second quarter, which was hurt by weak exports.
The government now projects 3.8-4.3 percent growth for 2013, instead of the 4.2-5.2 percent it estimated earlier. The previous estimate was based on the assumption that growth in the second quarter will range between 3.3 percent and 4.3 percent.
According to the data released by the National Economic and Social Development Board on Monday, GDP growth decelerated to 2.8 percent year-on-year in the second quarter, from an upwardly revised 5.4 percent growth in the first quarter.
The annual growth was forecast to moderate to 3.3 percent in the quarter ended June. The appreciation of the Thai baht coupled with weak global demand dragged exports, making it less likely for the economy to achieve a growth rate above 4.3 percent in 2013.
After seasonal adjustment, the economy contracted 0.3 percent from a quarter ago, when it fell by 1.7 percent. With the second consecutive sequential decline in GDP, the nation has entered a technical recession.
Nonetheless, the agency expects improving global economic conditions, stimulus measures taken by the government and favorable investment climate to underpin economic growth in the second half of 2013.
The year-over-year expansion was driven by private spending and investment. Private consumption was up 2.4 percent, but down from the 4.4 percent increase seen a quarter ago, with the slowdown due to a high base effect and the slowdown in domestic car sales.
Investment also grew at a slower pace of 4.5 percent, following the 5.8 percent rise in the previous three-month period. Meanwhile, exports declined 1.9 percent compared with the 4.5 percent growth in the prior quarter.
The planning agency expects consumption to grow by 2.6 percent and total investment by 6 percent. It cut the outlook for export growth to 5 percent from 7.6 percent. The current account is expected to be in surplus, accounting for 0.3 percent of the GDP.
Production-wise, the expansion was supported by the hotel and restaurant, real estate, wholesale and retail trade, and the banking sectors. The manufacturing sector contracted 1 percent in tandem with the export sector. The agriculture sector grew only 0.1 percent in the second quarter.
In order to address soft domestic demand and delayed investment, the Bank of Thailand lowered its interest rate in July for the first time this year. It trimmed its 2013 GDP forecast to 4.2 percent from 5.1 percent, citing delayed global recovery and weaker domestic demand.
The planning agency expects headline inflation rate to be in the range of 2.3 percent-2.8 percent.
by RTT Staff Writer
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