Thai Economy Shrinks in Q1

Thailand’s GDP contracted 0.6 percent from a year earlier in the first three months of 2014, down from a 0.6 percent expansion in the previous quarter. A rise in government expenditure on higher public salaries and wages was not enough to offset a drop in private consumption and investment.

Private consumption contracted 3.0 percent year-on-year, due to a fall in expenditure on durable goods, especially on domestic car sales which declined rapidly due to a high base in the first quarter of 2013 when large amounts of car were delivered under the first-car-buyer scheme. 

Total investment declined 9.8 percent. Private investment contracted by 7.3 percent, mainly due to declines in machinery and equipment and construction investment. Similarly, public investment contracted by 19.3 percent following a reduced disbursement in government investment budget.

Government consumption expenditure increased by 2.9 percent owing to a rise in expenditure on salaries and wages. However, expenditure on public utilities declined, hurt by a temporary closure of some government agencies in Bangkok area amid the political turmoil.  

Exports fell 0.4 percent while imports shrank at a faster 8.5 percent. 

On a quarter-over-quarter basis, the GDP fell 2.1 percent following a 0.1 percent rise in the fourth quarter of 2013. The Q1 data showed that prolonged political uncertainties continue to hurt domestic demand, investment, business confidence and tourism. The state planning agency cut its 2014 GDP growth forecast to 1.5 percent to 2.5 percent from 3 percent to 4 percent.

Thai Economy Shrinks in Q1

NESDB | Joana Taborda |
5/19/2014 9:07:20 AM