ASEAN KEY DESTINATIONS
Thailand sees Q2 growth but exports slip
THAILAND'S economy is expected to grow modestly in the second quarter even as exports fell for a second month in June dampened by tepid global demand, the central bank said yesterday.
Weak consumption and investment figures for June against the previous month also pointed to subdued growth for Southeast Asia's second-largest economy and strengthens the likelihood that interest rates will be kept low to support the economy.
"Economic growth moderated as consumption flattened out after picking up strongly in 2012 and merchandise exports contracted amid fragile global demand and supply constraints. Manufacturing production and investment slowed down accordingly," the central bank said in a statement.
Methee Supapong, the central bank's senior director macroeconomic and monetary policy department, said the economy in the second half should recover on exports as major economies, especially the United States, are expected to improve.
"If exports pick up, private consumption and investment will follow," he told a news briefing.
Thailand's economy grew 5.3 per cent from a year earlier in the first quarter but contracted 2.2 per cent on the quarter.
Earlier this month, the finance ministry said the economy may have expanded by less than 4 per cent in the second quarter from a year earlier and full-year GDP growth could be around 4 per cent.
The finance ministry had cut its growth outlook for 2013 GDP to 4.5 per cent from 5.3 per cent, citing weak consumption and the slow recovery in the economies of its trading partners.
Exports, which equal more than 60 per cent of the Thai economy, fell for a second month in a row by 3.5 per cent in June from a year earlier, central bank data showed, roughly matching Ministry of Commerce data published at the end of June.
In May, exports fell 5.1 per cent on year, according to the central bank.
In June, imports rose 0.9 per cent from a year earlier, resulting in a trade surplus of US$590 million, up from a surplus of US$540 million in May.
Thailand is a regional hub for global car makers and the world's number two producer of hard disk drives.
With the outlook for growth continuing subdued, most economists expect no change in the policy rate the rest of the year.
"The economy in the second quarter is really slow but we think the worst is over for this year," said Sarun Sunansathaporn, an economist at Tisco Securities. "Given the better outlook in the second half, a cut in the policy rate in May is enough and it should remain steady until the first half of next year," he added.
The central bank's monetary policy committee kept the benchmark interest rate unchanged at 2.50 per cent on July 10, after it cut rates in May. The central bank said the rate was appropriate for the economy, which did not need stimulus measures.
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