Friday, February 22, 2008

Fastest Growth for Thailand Economy in Six Quarters

by Michelle Roberts

Speculation has it that the economy of Thailand grew at its fastest speed in the last three months of the year that concluded. The reason for the fast growth of the Thai economy in six quarters is cited as the increase in export of computer chips, automobiles and rice. The economy of Thailand is the second biggest economy of South East Asia and it grew by 5.3% in its 4th quarter from its earlier year’s growth. This figure comes from the mean forecast of twelve economists that were surveyed. The economy’s report of gross domestic product will be declared on the 25th of February in Bangkok.

An economist at CIMB Securities SDN in Kuala Lumpur, Julia Goh Mei Ling, expressed that robust exports and manufacturing were the key drivers for the growth of the economy in the quarter. The economist further added that spending by consumers will also improve as the Thai people will be convinced about their country’s political views following the end of the regime of Prime Minister Samak Sundaravej in the January elections. The regime of the Thai premier was a military supported regime. The share of exports for the Thai economy amounts to almost 60% and it took its toll on the domestic spending by making it weaker following the military coup in September 2006.

As per the data of the central bank of Thailand overseas shipment increased by 24% in the 4th quarter which is almost twice the 12.6% growth for the third quarter. The exports earned Thailand $14.6 billion which was a record earning in November; as the Chinese and eastern European demands grew and US and Japanese demands declined. Although the speed of the economy of Thailand is increasing it is slowest as compared with speed of the economic growth of six big South East Asian countries. Among these nations, Singapore recorded a growth of 6% while Vietnam experienced a growth of 8.5% for the fourth quarter. There is also a risk involved in the growth of the Thai economy and it is that of US’. Since the United States is the biggest exporter for Thailand, if recession takes place in the US the growing export cannot last long for Thailand.

The estimate of Goldman Sachs Group Inc. in this regard is worth pondering upon because it had earlier 4.5% expansion for Thailand but on January 14 it cut its estimate to 4% for the current year following the risk of a possible recession in the US economy. The economist Aksarapak Wongcharoen with Tisco Securities in Bangkok anticipated that the US economy will experience a gentle slowdown. The adverse effects of the US and global economic slowdown will be exhibited in the form of sluggish exports that will begin in the second quarter in the current year, the economist further added. In 2007 the share of US export for Thailand amounted to 12.6% while Japan and China accounted for 11.9% and 9.7% respectively. The reduction of the standard interest rates by Bank of Thailand was five times in the last year which improved consumer spending in the 4th quarter.

 

 

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