Thailand escaped an outright first-quarter economic contraction, with growth supported by the continued recovery in private consumption, an acceleration of public investment and the resilience of tourism.
The National Economic and Social Development Board (NESDB) yesterday reported 0.3% quarter-to-quarter growth on a seasonally adjusted basis.
Year-on-year, the NESDB reported growth of 3% in the first quarter, an improvement from 2.1% in last year's fourth quarter.
The growth was contributed by a non-agricultural expansion of 4.1% that was offset by an agriculture sector that shrank by 4.8%.
Private consumption rose by 2.4%, improving on 2.1% growth in the previous quarter.
Consumption of durables continued to drop but showed a better rate than the previous quarter, while consumption of semi-durables and non-durables increased at a decelerating rate.
General government consumption rose by 2.5% compared with 3.6% in the previous quarter. The growth reflected upturns in purchases of goods and services by 14.7% and fixed capital consumption by 5.3%, while employee compensation fell by 1.5%.
Gross fixed capital formation rose by 10.7% compared with 3.2% growth in the previous quarter. The surge was due mainly to public investment in construction and machinery rising by 37.8%.
Private investment grew by 3.6%, decelerating from an increase of 4.1% in last year's fourth quarter.
The NESDB cut its full-year GDP growth forecast to 3-4% from an earlier prediction of 3.5% to 4.5% and lowered its export growth view to 0.2% from 3.5%.
Exports fell for a third straight month in March, while consumer confidence dropped to a 10-month low last month. If international sales decline in 2015, it will mark a record third straight year.
NESDB secretary-general Arkhom Termpittayapaisith said the Thai economy showed signs of an improving direction after a year-on-year contraction in last year's first quarter, 0.9% growth in the second quarter, 1% growth in the third quarter and 2.1% growth in the fourth quarter.
The government's planning agency changed its compilation method for GDP in the first quarter, adjusting its reference year to 2012 from 1988 to reflect current value better.
HSBC Global Research said the NESDB's GDP reading was a bit more upbeat than expected due partly to the continued pickup in domestic demand.
Nonetheless, the pace of economic recovery overall still appears weak, as shown by the tepid quarterly growth figure of 0.3%. The economy may have avoided an outright contraction in the first quarter due to the changes to the GDP series and the resulting downward revision of quarter-to-quarter growth in last year's fourth quarter.
HSBC expects the government will ensure fiscal spending remains on track or is accelerated. While the research house does not anticipate further monetary easing, it sees the policy rate remaining at the current low level for longer — at least through the first half of next year — in order to support the economic recovery.
Bank of Thailand spokesman Chirathep Senivongs Na Ayudhya said the country's lower quarterly growth underscored the persistence of weak economic conditions.
Shrinking exports and the continual decline in agricultural production could jeopardise domestic consumption and private investment in the coming periods, he said.
Finance Minister Sommai Phasee has repeatedly declared full-year growth of 3.7% is obtainable.
Economic growth in the second half should expand at a faster pace than in the first as public spending increases and domestic consumption and private investment pick up, he said.
To maintain budget disbursement momentum and bolster the economy, Mr Sommai has instructed state agencies to start preparing their disbursement process though the fiscal-2016 budget now under review by the National Legislative Assembly.
