Thailand's economy grew at the fastest pace in seven quarters towards the end of last year as exports of rice, automobiles and computer chips all steadily rose. Southeast Asia's second-biggest economy expanded 5.7 percent in the fourth quarter, accelerating from a revised 4.8 percent in the third quarter, the government said today in Bangkok.
Exports grew by 24 percent, almost double the pace of the third quarter, even as the baht's rise to a decade-high made them more expensive. Exports, which account for about 60 percent of the economy, accelerated from a 12.6 percent year on year rate of increase in the third quarter, according to central bank data. Exports reached a record $14.6 billion in November as demand from China and eastern Europe offset waning orders from the U.S. and Japan.
Quarter on quarter gross domestic product expanded by 1.8 percent in the fourth quarter, up from a 1.5 percent, seasonally adjusted, rate in the previous quarter.
The baht held at 32.29 per dollar as of 10:50 a.m. in Bangkok, its highest level since August 1997. The SET Index rose as much as 1.3 percent to 837.59, extending its gain over the past year to 22 percent.
It is not clear at this point how resilient Thai exports will be to any further slowdown in the US. Goldman Sachs recently cut their 2008 forecast for Thailand's expansion to 4 percent from an earlier estimate of 4.5 percent citing the possibility of a U.S. recession, while the Bank of Thailand continue to hold to 6 a percent growth forecast.
The U.S. bought 12.6 percent of Thailand's exports in 2007, followed by Japan's 11.9 percent and China's 9.7 percent.
Consumer spending rose 1.6 percent from a year earlier in the fourth quarter, slowing from 1.8 percent in the previous three months, today's report showed.
Total investment in the fourth quarter rose 4 percent, accelerating from a 2.6 percent gain in the previous quarter, today's report showed.
Manufacturing gained 8.1 percent following a 5.7 percent expansion in the previous three months. Private construction contracted 8.5 percent from growth of 0.7 percent a year earlier.
Government spending increased 16 percent, compared with the third quarter's 9.5 percent pace.
The Bank of Thailand lowered its benchmark interest rate five times last year in the longest string of rate cuts since May 2000. It reviews borrowing costs again this week. Most analysts expect the Bank of Thailand to keep its benchmark interest rate unchanged at the meeting on Feb. 27 due to accelerating inflation. Consumer prices rose 4.3 percent from a year earlier in January, the fastest inflation in 18 months, as fuel and food costs increased. There is, however, pressure on the political front, and the government has signaled it may pressure the central bank to lower interest rates. Prime Minister Samak said on Feb. 18 the government will use monetary policy to support economic growth.
Monday, February 25, 2008
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