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 Southeast Asia's second largest economy grew 0.9 percent in
April-June on a seasonally-adjusted basis from the previous quarter
as private and government spending and exports improved, the state
planning agency said on Monday.
The central bank believes there can be a strong V-shaped rebound
from the country's recent rough patch - predicting robust growth of
5.5 percent next year - but questions remain about the pace and
depth of a recovery.
Thailand's high household debt levels and headwinds facing exports
are "likely to constrain the bounce in growth", said Benjamin Shatil,
economist with JP Morgan in Singapore.
"We look for a modest recovery, rather than a sharp V-shaped
recovery through next year," he said.
The National Economic and Social Development Board, which compiles
gross domestic product data, on Monday trimmed its full-year growth
forecast to 1.5-2.0 percent from a 1.5-2.5 percent range.
It also revised the shrinkage in the first quarter from the previous
three months to 1.9 percent, from 2.1 percent.
After the data came out, the baht strengthened to 31.79 to the
dollar, the strongest since July 29, from 31.83, and then eased.
Thai stocks, which are up 19 percent this year, were flat for the
day.
Second quarter GDP data was keenly awaited, to see if Thailand
steered away from a recession and how the economy is faring after
the May 22 coup.
The NESDB said growth in the second quarter came from government
expenditure, private consumption and exports. Private investment
declined in the period.
DAMAGE FROM THE CRISIS
It said that Thailand in the second quarter grew 0.4 percent from a
year earlier, and in the first half contracted 0.1 percent from the
year-earlier period.
The first quarter shrinkage reflected the economic damage from a
political crisis that hit consumption, confidence and tourism.
The NESDB said the second half will show growth "supported by the
improved confidence and the return of government administration and
budget disbursement to normal process".
However, some pillars of the Thai economy remain shaky. Consumption
remains subdued, auto sales are tumbling and exports are tepid.
A slump in the key tourist industry, which accounts for about 10
percent of GDP, has eased. In July, the number of tourists fell 10.9
percent from a year ago, compared with June's 24.4 percent plunge.
Five-star hotelier Erawan group, which earlier forecast a 2-4
percent rise in revenue this year, said on Thursday it expects a 9
percent fall. An improving second half "can't offset a weak first
half," chief financial officer Kanyarat Krisnathevin said.
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'FAR FROM ROBUST'
Gundy Cahyadi, an economist with DBS Bank in Singapore, said "the
outlook is still far from being robust."
"GDP growth momentum is likely to pick up in late 2014 but a return
to near-term potential will still take some time, even if the
government is going to be clearly pro-growth," he added.
The junta has made delayed payments to rice farmers, approved
infrastructure projects and accelerated approvals for private
investment applications halted by political unrest.
Exports are equal to more than 60 percent of the economy, so
sustained growth gains depend on raising shipments. Weak exports
have hit factory output. In April-June, exports rose just 0.6
percent from a year earlier and factory output fell 5 percent, and
the average capacity utilization was 59.5 percent, the lowest in the
past 10 quarters.
The central bank has forecast economic growth of 1.5 percent this
year.
Santitarn Sathirathai, economist with Credit Suisse in Singapore,
said that to grow like that, Thailand will need to expand at nearly
9 percent in the second half "and that's quite a demanding number
especially when you don't have that many of the strong, positive
catalysts this year."
Government spending, halted during the paralyzing political crisis,
"will eventually come through and help but it will probably take
time," he said.
The Bank of Thailand's monetary policy committee has kept the policy
rate at 2.0 percent since March, and many economists expect it will
remain at that level as the central bank waits for steps by the
government to get economic growth going. The next meeting to review
policy is on Sept. 17.
(Additional reporting by Pairat Temphairojana in Bangkok and
Masayuki Kitano and Jongwoo Cheon in Singapore; Editing by Richard
Borsuk)
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