Thailand avoids recession with 0.9% Q2 growth

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Thailand’s economy grew 0.9 per cent in the second quarter, dodging recession after the military ended months of political deadlock with a coup and promised to unshackle spending.

The military government, under coup-leading Army Chief Prayuth Chan-ocha, has pegged its legitimacy to improving the economy after months of political protests froze government spending, scared off tourists and battered consumer spending.

Between April and June the economy crept back to life with 0.9 per cent growth after shrinking a revised 1.9 per cent in the preceding three months, the National Economic and Social Development Board reported. On a year-on-year basis, the economy grew 0.4 per cent, NESDB said.

Since seizing power on May 22, Prayuth has opened the coffers – pledging to kick-start stalled investment projects, including major train and road links, and paying state debts to rice farmers to help spur agriculture.

Despite the positive momentum, Southeast Asia’s second largest economy still looks set for a disappointing year. The board clipped its growth outlook for 2014, forecasting 1.5 to 2.0 per cent expansion, down from a previous estimate of 1.5 to 2.5 per cent.

It said the political turmoil of the first five months of 2014 would likely drag the economy to “perform below its potential” over the full year, with key auto and tourism sectors still flagging. Visitor numbers to Thailand are down just over 12 per cent year-on-year, despite desperate efforts to reassure tourists that the ‘Land of Smiles’ is safe.

BUDGET MATTERS

On Monday, Prayuth proposed a 2.57 trillion baht (S$100 billion) budget for 2015 to the army-appointed National Legislative Assembly. Prayuth said the spending plan, which awaits the NLA’s approval, is around US$1.6 billion (S$2 billion) more than 2014 but pledged it will be disbursed with “capability and efficiency and transparency.”

Critics of the elected former government of Yingluck Shinawatra said her government squandered money on populist policies such as a flagship rice subsidy scheme. Prayuth, who has appointed the air force chief to oversee the economy, has said the power grab was necessary to restore the nation’s economic fortunes as well as peace and order.

The junta has installed an assembly which is expected to elect a new prime minister over coming days. Thai media hotly tips Prayuth for the post.

The stock market has shot up nearly 10 per cent since the coup. Analysts expect domestic demand to creep forward as the junta’s policies kick in but are less enthusiastic over the speed of economic expansion.

“Growth prospects have brightened since the military takeover, which reduced political uncertainties and restored relative peace to the country,” said analysts Capital Economics in a briefing note. “Nonetheless, the economy continues to face several headwinds, such as high household debt burdens. As such, growth is unlikely to return to its trend rate anytime soon.”

The kingdom had enjoyed a reputation as “Teflon Thailand” for its enviable record of economic resilience in the face of the last eight years of political upheaval as well as devastating floods in 2011.

 

 

Source : Channel News Asia | August 18, 2014

Thomas D’Innocenzi

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About thomasdinnocenzi

Thomas D'Innocenzi is a highly accomplished, results-focused senior international executive with extensive experience in global sourcing and market development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global sourcing operations worldwide. Extensive experience in international market development operations to accommodate rapid growth. Skilled in building top-performing teams, benchmarking performance, and restricting organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. As principal of Nova Advisors, LLC I’ve assembled an exemplary team that brings with them the knowledge and experience gained from starting up a Global Sourcing program with multiple Fortune 500 companies as well as the largest supplier network throughout the Asia-Pacific region. We have experience and expertise in more than a thousand medical and pharmaceutical products in manufacturing and sourcing at the best value. The right product, the right price point and the right branding fueled these successes that resulted in double-digit growth for top line sales and bottom line net margins for our customers. What sets us apart: • Our reach includes a large network of suppliers & manufacturers spanning 13 countries in Asia-Pacific region • We understand the manufacturing process and the business of the supplier and the buyer • Our company culture is based on quality assurance and our process is based on local quality control Our commitment is to be your partner offering the best products and services at the lowest cost. Contact me to discuss how we can make the global marketplace work for you. thomas@novaadvisors.com In addition, I am open to discussing opportunities in global sourcing, international marketing & sales, logistics and medical/pharma in Thailand, Vietnam, Malaysia, Philippines & Japan. Aside from my work I enjoy piano, astronomy, physics, and assisting my daughters with their studies. SPECIALTIES: Global Sourcing, Supply Chain Management, Business Development, Marketing, Logistics, Global Networking, Market Development, Healthcare Solutions, Pharmaceuticals, Medical Devices, Technology, Asia, Southeast Asia, US and Canada
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