ECON: Thailand continues to post robust growth of 9.1% in 2Q10

Once again, Thailand has proved its resiliency against the downside risks i.e. political turmoil as it posted robust growth of 9.1% YoY in 2Q10. As a result, the economy expanded by a rapid rate of 10.6% in 1H10. Despite the strong year-on-year growth, the economy appears to cool off somewhat in 2Q10 as the seasonally adjusted growth slowed to 0.2% from 3.3% marked in 1Q10. As the slowdown pattern in the US and Eurozone has become more prominent, with more restrictive economic policies among the regional economies, we expect Thailand ’s growth to soften to around 4.5% in 2H10. This implies that the full-year growth will be 7.5% YoY (against our previous forecast of 6.7%).


Growth was broader based …

In terms of economic components, we are satisfied with growth in most of economic drivers. While private consumption accelerated to 6.5% YoY, overall investments remained relatively stable at 12.2% in the period. It was quite encouraging to see that investments by the private sector jumped strongly by 18.5% despite the slight contraction of pubic investment growth (-3.4%).

…and more balanced

Apart from growth momentum, we always put our focus on the growth structure and its trend. This element will be very vital in the near future as we see more signs of weakness among the economies in G2 (US and Europe ). It is very encouraging to see that Thai economy has continued to firm up its balance growth structure. The economy in general has been driven by domestic factors as private consumption’s contribution to economic growth rose to 3.6% (from 2.1% in 1Q), with contribution from investment increasing modestly to 2.6%. Meanwhile, the country appeared to gain traction from net exports as it contributed 2.8% to growth against a drag of 2.4% in the previous quarter. This was partly due to a slight inventory adjustment in the current quarter as its contribution to growth from inventory fell slightly (-0.5%). We view that the current economic structure if sustained will be a good tool to help Thailand weather the upcoming global economic alignment.