Thailand’s economy grew more than expected in the second quarter of 2016, expanding 3.5% year-on-year, higher than the 3.2% growth posted in the first quarter, according to the latest data from the National Economic and Social Development Board (NESDB).
After seasonal adjustment, the Southeast Asian nation’s gross domestic product (GDP) in the second quarter expanded by 0.8% from the first quarter of the year, and the first half of 2016 registered a 3.4% growth as compared to the same period last year.
Growth in the quarter reviewed was bolstered by the manufacturing and service sectors as well as domestic demand, even as the agricultural and export segments remained weak.
On the production side, the impact of the drought on the agricultural sector and livestock and fishery production eased during the period. Nonetheless, overall agricultural production still contracted slightly by 0.1%, said NESDB.
On the other hand, the non-agricultural sector’s production improved by 3.7%, driven mainly by a pickup in manufacturing, posting growth of 2.0% in the quarter in contrast to a fall of 0.2% in the first quarter of the year.
The service-related sectors made a robust performance, as the hotel and restaurant sector and the construction industry continued to grow at high rates.
For the external sector, net exports increased slightly with a 0.6% hike in the volume of goods and services shipped out, whereas imports of goods and services shrank by 2.2%.
On the expenditure side, domestic demand grew significantly, mainly attributed to the strong growth in private consumption, while government spending and gross fixed capital formation slackened.
Private consumption widened by 3.8% compared to a 2.3% growth in the first quarter of 2016 on the back of higher purchases of durable and semi-durable goods. In particular, new vehicle purchase by households significantly picked up with a 13.1% growth compared to a 2.4% contraction in the previous quarter. Rising demand for vehicles was driven by new car launches and the ongoing incentive campaign, together with higher farm income from both crops and fishery as well as the effect of the government’s fiscal stimulus package.
General government consumption broadened by 2.2% in the second quarter, decelerating from an 8.0% growth in the first three months of the year. Gross fixed capital formation rose by 2.7%, showing a slower pace from 4.9% in the first quarter. Public investment surged significantly by 10.4%, but private investment grew only by 0.1% in April-June 2016, a notable slowdown from 2.7% in the first quarter.
For full-year 2016, NESDB forecasts the Thai economy to grow from 3.0% to 3.5%, an improvement over 2.8% in 2015. The outlook is based on assumptions of expanded government expenditure and continued infrastructure investment, as well as the government’s stimulus package introduced from September 2015 to April 2016 starting to bear fruit. Moreover, the agency expects economic traction from strong inbound tourist arrivals, low crude oil prices, and the considerable rise in farm income due to improvements in agricultural production and key agricultural prices.
The board also sees private consumption and total investment increasing by 2.7% and 3.3%, respectively, but anticipates the country’s export value to fall by 1.9%.
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