Thailand’s Q2 growth surprises on the upside

BANGKOK - Growth in Thailand in Q2 surprised on the upside, accelerating to 3.7% y/y from 3.3% in Q1, but a more broad-based recovery remains elusive, says ANZ Bank. “Trade and public spending continue to do the heavy lifting as private consumption and investment both eased,” ANZ says.

“Investment posted its weakest growth in seven quarters, emphasising the softness in domestic demand. Inflation pressures are unlikely to strengthen.

“Thus, we still expect the central bank to keep rates steady through 2017.”

ANZ says the annual acceleration in GDP growth masks persistent softness in private domestic demand. Household spending, which accounts for a little over half of GDP, moderated to 3.0% y/y from 3.25% in Q1.

And investment activity remained a drag. At 0.4% y/y, total investment pulled back from 1.7% in Q1, marking two straight quarters of easing.

“While private investment is showing some signs of improvement, it is still contracting.

“Looking ahead, domestic demand must pick up if the recovery is to be sustained. While goods trade and tourism have so far provided a comfortable cushion to growth, the persistently low utilisation rate will cap further gains in GDP.

“Overall, we still expect full-year 2017 growth at 3.5%, at the lower end of the Government’s forecast range of 3.5%-4.0%.”  www.live.anz.com