Thailand’s Q2 GDP figures do not disappoint

BANGKOK - Similar to the previous quarter, the breadth of growth in Thailand remains impressive. Private consumption increased by 4.5% y/y, the strongest pace since Q1 2013. Investment and exports also strengthened to 3.6% y/y and 6.4% y/y respectively, from 3.4% and 6.0% in the previous quarter.

Government consumption slowed marginally.  Within overall investment, private activity increased by 3.2% y/y, slightly faster than in the previous quarter.

In a research note, ANZ Bank says the on-going improvement in private investment reflects a combination of improving capacity utilisation and a ‘crowding in’ of the private sector by public infrastructure spending.

 Public investment increased by 4.9% y/y, again an improvement over the 4% y/y growth recorded in Q1.

Growth in imports eased to 7.5% y/y from 8.7% y/y previously, but the softer pace of increase was still consistent with strong domestic demand.

“At the same time,” says ANZ, the combination of stronger exports and a milder increase in imports reduced the drag from net exports on overall GDP.

“Net exports subtracted 0.2% from overall GDP growth compared with 0.9% in Q1 2018.”

ANZ described a H1 2018 GDP outturn of 4.8% y/y as impressive.

“Viewed in conjunction with the fact that inflation has now settled in the BoT’s target range of 1-4%, the conditions for policy normalisation are falling in place,” it said.

“We continue to expect a 25 basis points increase in November 2018.”  www.live.anz.com (ATI).