Strong economic growth: Forever & ever?

18.9% economic growth at end of 2012 is fastest since 1993. Is this due to some special policy? Can it be repeated?

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Economy

If we compare a strong quarter with a terrible quarter, the strong quarter is going to look unusually good.

Economic statistics: Read them carefully

18.9% economic growth sounds wonderful, certainly compared to more normal 5% to 6% levels.

So what’s happened? Is this the result of some remarkably successful government economy policy?

No, it’s more a matter of ordinary statistics. If we compare a strong quarter with a terrible quarter, the strong quarter is going to look unusually good. In 2011, much of the country’s economic activity almost completely stopped during the the last three months, (the fourth quarter) when the Great Floods hit Bangkok and surrounding areas. Growth fell more than 10%.

In 2012, however, there was a huge jump in economic activity after the flood-damaged factories were repaired (economic recovery).

Thus, if we compare, 2012’s flood-free final quarter with the fourth quarter of 2011 (year-on-year), we will see a big difference. Can double-digit (ten percent or more) growth continue this year? That is very unlikely. 2013 is likely to be normal, much like the end of 2012, with normal growth of 5% or 6% – unless, of course, there is another major flood or worse.

Growth soars to 18.9 per cent

Q4 data likely to bring 2012 figure to 6.4 per cent
19 Feb 2013
Chatrudee Theparat

The Thai economy expanded sharply year-on-year in the fourth quarter of 2012, reflecting a rebound from the impact of widespread floods in late 2011.

Gross domestic product grew by 18.9 per cent in the three months to December from a year earlier after expanding a revised 3.1 per cent in the previous quarter.

The latest figures released Monday marks the fastest growth since Thailand began compiling data in 1993, according to the report of the National Economic and Social Development Board.

Secretary-general Arkhom Termpittayapaisith said the fourth-quarter boost played a vital role in delivering 6.4 per cent growth last year, higher than the earlier 5.5 per cent forecast

The expansion was driven by manufacturing, hotels, restaurants and construction, while robust private consumption, private investment and government spending also contributed.

Mr Arkhom said the economy grew by 3.6 per cent on a quarterly basis, a clear indication of recovery from the global slowdown.

"Fourth-quarter GDP was not just the effect of the low base in 2011, but also government stimulus, leading to double-digit growth in both consumption and investment," said Kampon Adireksombat, an economist with Tisco Securities.

"It's clear from the number that we have less downside risk on growth. We need to monitor price pressures because we've seen some cost-push pressure from higher oil prices as well as more signs of demand-pull inflation," noted the analyst from Tisco Securities.

The government's planning unit forecasts the Thai economy to grow in a range of 4.5 per cent and 5.5 per cent this year.

External demand will be a bigger factor driving the economy in the wake of the global recovery.

Domestic demand may slump as the impulse fades for stimulus and post-flood spending.

Export value is forecast to rise by 11 per cent this year, compared with 3.2 per cent in 2012, as household consumption and investment grow by 3.5 per cent and 8.9 per cent. 

Headline inflation is projected in a range of 2.5 per cent to 3.5 per cent, and the current account surplus is seen at 0.9 per cent of GDP.

Consumption should grow by 3.5 per cent, slowing from 6.7 per cent in 2012 with the expiry of the first-time car buyer scheme.

The first-car tax rebate drove consumption in the last quarter of 2012 to grow by 14.8 per cent.

Total investment is forecast to grow by 8.9 per cent, compared with 13.3 per cent in 2012, with public and private investment to expand by 12 per cent and 8 per cent respectively. 

(Source: Bangkok Post, Local News, Growth soars to 18.9 per cent, Q4 data likely to bring 2012 figure to 6.4 per cent, 19 Feb 2013, Chatrudee Theparat, link

Economic Growth Vocabulary

economic growth - an increase in economic activity in a country or region การพัฒนา, การเพิ่มขึ้น,การเจริญเติบโต (See Wikipedia)
growth rate - อัตราเพิ่ม, อัตราเติบโต

domestic - within the country ภายในประเทศ

Gross Domestic Product (GDP) - the total value of all the goods and services produced by a country in one year: "the increase in the amount of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP. Growth is usually calculated in real terms, i.e. inflation-adjusted terms, in order to obviate the distorting effect of inflation on the price of the goods produced" (See Wikipedia)

inflation - the level of prices rising in the economy as a whole ภาวะเงินเฟ้อ
inflation rate - the rate at which all prices in the economy are increasing  อัตราเงินเฟ้อ

headline inflation - the rate at which the prices of goods and services rise over a period of time, including costs which are likely to change, such as food and fuel and, in the UK

cost-push inflation - when a cost such as wages or raw materials increases and businesses then increase their prices in order to keep their profits (See Wikipedia)
cost-push pressure from higher oil prices

demand-pull inflation - an increase in prices due to the fact that the demand for goods and services rises quicker than the amount of goods and services that can be supplied (See Wikipedia)

demand - the desire or need of customers for goods or services which they want to buy or use (See Wikipedia)
aggregate demand -
the total demand for final goods and services in an economy or economies (See Wikipedia)

domestic demand -
the aggregate demand for this country (Thailand)
external demand - the aggregate for other countries (which buy the exports of Thailand)

soar - increase fast, increase quickly
growth soars
growth soars to 18.9 per cent

Q4 - fourth quarter, 4th quarter (the last three months of the official calendar for large companies and the government, used for budgeting and reporting)
fourth quarter

data - facts or information used for making calculations or decisions ข้อมูล
Q4 data

figure - an amount จำนวน
Q4 data likely to bring 2012 figure to 6.4 per cent

expand - to become larger ขายตัวออกไป
the economy expanded

sharply -
moving very quickly and suddenly
the economy expanded sharply

year-on-year - comparing a time period this year (month, quarter, half year) with the same period last year
the economy expanded sharply year-on-year

economy expanded sharply year-on-year in the fourth quarter of 2012

widespread - happening or existing in many places, or affecting many people อย่างแพร่หลาย
widespread floods

impact - an effect or influence ผลกระทบ
the impact of widespread floods

rebound - rise again after falling การฟื้นตัวของเศรษฐกิจ เพิ่มขึ้นอีกครั้ง หลังจากมีการปรับลดไป
a rebound from the impact of widespread floods  

X, reflecting Y - X happened because of Y
the economic expansion reflected a rebound from the impact of widespread floods in late 2011.

The Thai economy expanded sharply year-on-year in the fourth quarter of 2012, reflecting a rebound from the impact of widespread floods in late 2011.

revised - changed and improved เปลี่ยนแปลง

Gross domestic product grew by 18.9 per cent in the three months to December from a year earlier after expanding a revised 3.1 per cent in the previous quarter.

figures - statistics, numbers describing the economy  
the latest figures

released - made available to the public
The latest figures released Monday

X marks Y - X shows that Y happened

The latest figures released Monday marks the fastest growth since Thailand began compiling data in 1993, according to the report of the National Economic and Social Development Board.

boost - to increase; to strengthen เพิ่ม; ทำให้มีกำลังมากขึ้น
the fourth-quarter boost

role - the position or purpose that someone or something has in a situation, organisation, society or relationship บทบาท
played a role in

vital - very important and necessary ที่สำคัญ ที่จำเป็นยิ่ง
vital role - an important role, an important function or purpose in some situation

played a vital role in
played a vital role in delivering 6.4 per cent growth last year

forecast - a statement about what will happen in the future based on information available now พยากรณ์
the earlier forecast
the earlier 5.5 per cent forecast

the fourth-quarter boost played a vital role in delivering 6.4 per cent growth last year, higher than the earlier 5.5 per cent forecast.

expansion - when something increases in size, number or importance การขยายออก
driven by - caused by
The expansion was driven by  

construction - the work of building or making something, especially buildings, bridges, etc. การก่อสร้าง
The expansion was driven by manufacturing, hotels, restaurants and construction

consumption - money spent by households and families on goods and services การบริโภค (See Wikipedia)

robust
- strong
robust consumption - high amounts of consumption

investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)

contribute
(verb) – to help make something successful ช่วยก่อให้เกิด สนับสนุน
contribution
(noun) - something that you do or give to help make something successful ผลงาน,การช่วยเหลือ
contributed to the expansion - helped cause the increase

robust
private consumption, private investment and government spending also contributed to the expansion

global - throughout the world; all over the world, including the whole world ทั่วโลก ทั้งโลก
global slowdown - when all the economies around the world are not doing so well (slowing down, less economic activity)

recovery - when the economy gets better (more jobs, higher incomes) การฟื้นฟูสภาพ becoming strong and healthy again after an illness or a problem ฟื้นฟู
recovery from the global slowdown
global recovery

clear - easy to understand
indication - something that shows you something (a sign that something happened, is true or exists) เครื่องบ่งชี้

a clear indication - something that shows you something very clearly
a clear indication of recovery from the global slowdown

quarter -
three months of the year (on the official calendar of companies)
on a quarterly basis -
using quarters

fourth-quarter - the last three months of the year
fourth-quarter GDP

Mr Arkhom said the economy grew by 3.6 per cent on a quarterly basis, a clear indication of recovery from the global slowdown.

double - to become twice as big, twice as much or twice as many เพิ่มเป็นสองเท่า
digit - any one of the ten numbers 0 to 9 ตัวเลข (0 ถึง 9)

double
-digit - 10 more more 
double-digit growth - growth of 10% or more

leading to double-digit growth in both consumption and investment

low base - the number starting from in calculating a change
the effect of the low base in 2011

government stimulus - government spending to get a slow economy growing again

"Fourth-quarter GDP was not just the effect of the low base in 2011, but also government stimulus, leading to double-digit growth in both consumption and investment," said Kampon Adireksombat, an economist with Tisco Securities

risk - danger, how likely or possible it is for a bad event that causes harm and damage ความเสี่ยง
downside risk - the risk of a decrease in something (that is good)
downside risk on growth

pressure - a force causing change ความกดดัน
price pressures - things that are causing changes in prices, causing inflation

monitor - watch closely what is going on (checking for problems) ตรวจ, ติดตาม, เฝ้าสังเกต ตรวจสอบ ตรวจตรา  เฝ้าจับตาดู  เฝ้าดู จับตาดู
monitor price pressures

sign -
something that shows that something happened or is happening
signs of demand-pull inflation

"It's clear from the number that we have less downside risk on growth. We need to monitor price pressures because we've seen some cost-push pressure from higher oil prices as well as more signs of demand-pull inflation," noted the analyst from Tisco Securities

forecasts - what experts say will happen in the future คาดการณ์

The government's planning unit forecasts the Thai economy to grow in a range of 4.5 per cent and 5.5 per cent this year.

in the wake of - happening after a big event
in the wake of the global recovery

factor - a fact or situation which influences the result of something ปัจจัย

a factor driving the economy
a big factor driving the economy
a bigger factor driving the economy
a bigger factor driving the economy in the wake of the global recovery

External demand will be a bigger factor driving the economy in the wake of the global recovery.

slump - 1. to fall suddenly ตกต่ำมาก; 2. a period when an economy is much less successful than before and many people lose their jobs ช่วงเศรษฐกิจตกต่ำ
domestic demand may slump

impulse - a sudden desire to do something แรงผลักดัน แรงกระตุ้น
as the impulse fades for stimulus and post-flood spending

Domestic demand may slump as the impulse fades for stimulus and post-flood spending.

household - a group of people, often a family, who live together ครัวเรือน
household consumption

Export value is forecast to rise by 11 per cent this year, compared with 3.2 per cent in 2012, as household consumption and investment grow by 3.5 per cent and 8.9 per cent. 

range - all the amounts or numbers between two numbers
a range of 2.5 per cent to 3.5 per cent

projected - expected, forecast; what people believe it will be in the future
headline inflation is projected in a range of 2.5 per cent to 3.5 per cent

current - of the present time ปัจจุบัน
current account - money coming into and going out of a country from imports and exports of goods and services and income from investments: " one of the two primary components of the balance of payments, the other being capital account. It is the sum of the balance of trade (i.e., net revenue on exports minus payments for imports), factor income (earnings on foreign investments minus payments made to foreign investors) and cash transfers." (See Wikipedia)

surplus - an amount above the required or necessary amount
current account surplus - when there is more money coming into a country th

Headline inflation is projected in a range of 2.5 per cent to 3.5 per cent, and the current account surplus is seen at 0.9 per cent of GDP.

scheme - a plan that is developed by a government or large organisation in order to provide a particular service for people แผนการ โครงการ
the first-time car buyer scheme

expiry - the end of something, expiration 
the expiry of the first-time car buyer scheme

Consumption should grow by 3.5 per cent, slowing from 6.7 per cent in 2012 with the expiry of the first-time car buyer scheme.

rebate - when after paying money, some of the money is given back
the first-car tax rebate


The first-car tax rebate drove consumption in the last quarter of 2012 to grow by 14.8 per cent.

public investment - investment by the government
private investment - investment by companies (owned by people, not government)

public investment to expand by 12 per cent
private investment to expand by 8 per cent

respectively - meaning: the numbers apply to the words just mentioned (X and Y, to expand by U% and W% respectively; X by U%, Y by W%)

Total investment is forecast to grow by 8.9 per cent, compared with 13.3 per cent in 2012, with public and private investment to expand by 12 per cent and 8 per cent respectively.

About the author

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Writer: Jon Fernquest
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