Thai Economic in First Quarter 2010

The Thai economy in 1Q2010 increased by 12.0%, compared with a rise of 5.9% in previous quarter. This resulted from the expansion of goods and services exports and imports by 16.2%, and 31.4%, respectively, along with higher numbers of foreign tourists. Moreover, household consumption expenditure grew by 4.0%, mainly driven by higher expenditures on durable goods such as vehicles, and electrical appliances in line with higher farm income of major crops such as rubber, cassava, sugarcane, and oil palm, as well as low unemployment rate. Domestic investment lift up by 12.6%, compared with a fall of 3.4% in previous quarter comprising upward trend of construction and equipment investment of the private sector, and continual expansion of the public investment. Government consumption expenditure increased by 6.9%, continuously rising from previous quarter. This partly resulted from the effect of second phase of economic stimulus package disbursement (SP2).

                                        Sources: Bank of Thailand, IMF, EIU

Regarding external demand, export continued to register a marked expansion in line with the global economic recovery. Export value, amounting to 16,23 billion US dollars, rose by 40.9 percent (yoy). In particular, exports of agricultural and high-tech products continued to register high growth rates. Export value of agricultural products rose in response to increasing rubber and cassava prices, while that of high-tech products expanded following exports of vehicles, electrical appliances and petroleum products.

International reserves at the end of April 2010 stood at 147.59 billion US dollars.

Current account in the first quarter registered a surplus of 5.25 billion US dollars which was equivalent to 172.51 billion baht, continued surplus from the previous quarter which registered a surplus of 4.27 billion US dollars. This was attributed by trade balance surplus of 2.13 billion US dollars and net service, income and transfer surplus of 3.12 billion US dollars.
Thai Economic Projection in 2010

The economic forecast for 2010 remains in a range of 3.5-4.5 percent due to high uncertainties. Despite an outstanding growth of 12.0 percent in the first quarter, the economy remains under certain risks, including (i) Debt crisis in European Union could endanger global economic recovery, (ii) Political instability can inevitably lead to lower number of inbound tourists, while posing difficulties to the government administrative process and causing a delay in both budget disbursement of Stimulus Package 2 (SP2) or Thai Kem Khang 2012 and fiscal budget 2011, (iii) Private consumption and investment are expected to slow down while long-term capital outflow tends to surge following a worsen confidence of all domestic parties, and (iv) Severe drought is expected to disrupt agricultural production, subsequently lead to a lower farm income. Hence, several economic indicators are forecasted as follows: (i) Headline inflation between 3.0-4.0 percent, (ii) Unemployment rate at 1.3 percent, and (iii) Current account surplus of 4.1 percent of GDP.

Source: Office of National Economic and Social Development Board, 24th May 2010

Updated: 24 Mayl 2010