Consumption up 0.6% in quarter

Bangkok Post (1 November 2007)

GDP growth likely to pick up, says BoTEconomic growth picked up in the third quarter due to robust exports and a recovery in household consumption and private investment, according to the Bank of Thailand. Amara Sriphayak, senior director for the Domestic Economy Department, said household consumption grew 0.6% year-on-year in the third quarter. In the second quarter it was stable. Private investment contracted 0.6% in the third quarter, but picked up from earlier because of higher commercial vehicle sales and an increase in imports of capital goods, she said. Exports totalled $13.2 billion in September, up 12.6% year-on-year. Exports slowed slightly from August, but remained strong. However, this was due to $466 million worth of gold exports pushed up by high prices. Labour-intensive exports, which exclude gold, grew 16% year-on-year in September. ''Gross domestic product grew 4.2% in the first quarter and 4.4% in the second quarter. If all indicators, especially manufacturing, remain strong, GDP growth in the third quarter should be higher than in the second quarter,'' she said. Dr Amara said exports were estimated to have expanded by 13-15% in the second quarter of the year, down from 19% in the first quarter, as the economies of key trade partners slowed. In any case, exports to the US contracted by 6.6% in September with shares sliding to 13% from 15%. However, exports benefited from good diversification. Sales to Eastern Europe grew 83% year-on-year in September, up from 76% in August. Imports totalled $11.3 billion, up 9.3% year-on-year. Imports of machinery grew 2.4%, excluding $150 million worth of aircraft. Fuel imports decreased by 10.2% year-on-year in September partly because natural gas sales were booked later. Imports accelerated in the third quarter in both price and volume. The business sentiment index increased to 44.5 in September, up from 43.5 in August, reflecting improved sentiment. The three-month advance index increased to 51.4 in September from 50.2 in the previous month. Dr Amara said the Dubai oil price averaged $76 per barrel (West Texas Intermediate $85.20 per barrel) in October. The average oil price fell under the worst case forecast of $80 per barrel on average in the fourth quarter. The central bank projects economic growth at 4.3-4.8% this year and 4.5-6% for 2008. She said the oil price had increased by 4% since the beginning of the year. The central bank expected a 1% increase in oil prices to shed 0.04% off the GDP. In any case, for every one baht the currency strengthens against the dollar, retail oil prices fall by 50-60 satang. Tarisa Watanagase, the central bank governor, said the economy would accelerate in 2008 as the US sub-prime mortgage crisis and depreciating dollar were having a limited impact on the economy.''Several private investment projects have begun, such as those in Map Ta Put industrial estate, although the public sector has not invested in urban mass transit projects yet. From now on, investments could pick up in line with the economy. There would be increasing import demand of capital goods and machines,'' she said.