The pace of contraction in GDP narrowed to 2.6% y/y in Q1, following a 4.1% fall in the previous quarter amid strong growth in public investment and goods exports.
Prospects for Q2 have deteriorated
The surge in Covid cases, slow vaccine rollout, and new restrictions will hit confidence and delay the anticipated recovery in household consumption, particularly of services. We also expect the planned opening of key tourist destinations to quarantine-free travel to be delayed. We expect GDP growth to grow 2.8% this year.
GDP contracted by 2.6% y/y in Q1, in line with our forecast although better than consensus. Sequential growth slowed to 0.2% on the quarter (seasonally adjusted) with the re-imposition of stringent containment measures in January weighing on household spending and business investment.
Household spending contracted 0.4% q/q in Q1, 1.2% lower than a year ago
Indeed, household spending contracted 0.4% q/q in Q1, to be 1.2% lower than a year ago. Private investment, notably in structures, also fell on the quarter although some pay back was expected after Q4’s strong rebound.
Encouragingly, public investment surged 23% q/q with infrastructure spending up nearly 30% y/y. This raises hopes that public spending will turn more supportive following delays. Externally, total exports rose 8% y/y amid strong external demand and a smaller contraction in service exports. However, with imports also recording strong growth, net exports subtracted 8ppt from Q1’s y/y growth.
Prospects for Q2 have deteriorated as social distancing measures were reimposed in April to curb soaring Covid infections. Most of the country is now classified as Red Zones. This still allows businesses outside of entertainment to operate, albeit at reduced capacity. We see an increased risk of a stricter nationwide lockdown given elevated case numbers.
Thailand relaxes COVID-19 measures to help revive economy
During the past couple weeks, new infection cases have been down from roughly 20,000 daily cases to 17,000 -19,000. Moreover, the number of daily discharges is exceeding infections, which has led to the conclusion that the situation is improving.
Thailand relaxed more virus related social curbs on September 1st, in dozens of cities including Bangkok, in a move that may indicate that the country’s economy, hit hard by COVID-19 will soon revive, lead by the export sector and sound financial fundamentals.(more…)
Southeast Asia to relinquish its lead over Latin America says Moody’s
While the emerging economies of Southeast Asia have outperformed their counterparts in Latin America for most of the past two decades, their lead will slide in the next few quarters as Southeast Asian governments clamp down to fight the pandemic’s lingering second and third waves.
The Delta surge is casting larger clouds over the global recovery and emerging markets are in the thick of it. Despite the ebbing of the coronavirus variant in India, where it first emerged, its spread in Southeast Asia, Africa, and the Middle East has steepened the road to recovery in these regions.(more…)
Thailand Raises Public Debt Ceiling from 60% to 70% of GDP
Thailand’s State Monetary and Fiscal Policy Committee has decided to raise the ceiling of the public debt-to-GDP ratio from 60%...
Thailand Approves Package to Attract Wealthy Foreigners and Professionals
Thailand’s Cabinet has approved an economic stimulus and investment promotion package aimed at attracting wealthy foreigners and highly skilled professionals...
The Role of Telemedicine Today: During and Beyond the COVID-19
Lockdowns, quarantine periods, and hospitals fast filling to the brink needed the medical community to come up with solutions fast....
Malaysia, Thailand banks to join the ASEAN Banking Integration Framework
Banking institutions from Thailand and Malaysia are invited to join the ASEAN Banking Integration Framework and indicate their interest to...
Climate Change Could Force 49 Million People to Migrate in East Asia and the Pacific
Out-migration hotspots in agricultural areas of central Thailand and Myanmar coincide with areas expected to see declines in both water...