Thailand’s economy outpaced expectations in the first quarter to expand at its fastest annual rate in three years, providing some relief for a military government that has struggled to stimulate growth in the two years since it seized power.
However, with exports expected to shrink for a fourth year running and consumption crimped by high household debts and the worst drought in a decade, economists said more fiscal stimulus and lower interest rates might be needed to prevent growth momentum from stalling.
On quarter, Southeast Asia’s second-largest economy grew a seasonally adjusted 0.9 percent in the first quarter, boosted by government spending and tourism, Thailand’s National Economic and Social Development Board (NESDB) said yesterday.
Photo: Reuters
The pace was faster than the 0.8 percent growth recorded in the fourth quarter of last year and 0.6 percent growth forecast in a Reuters poll.
The economy grew 3.2 percent year-on-year, better than the 2.8 percent annual growth posted in the fourth quarter of last year and higher than economists’ estimates.
Thailand’s economy remains fragile two years after a military coup ended months of political unrest as its main growth engines — exports and domestic demand — remain weak.
“Thailand’s economy got off to a solid start in 2016, but high household debt and continued political uncertainty are likely to drag down growth again over the coming quarters,” Capital Economics Ltd Singapore-based economist Krystal Tan said.
The NESDB expects exports to shrink 1.7 percent this year, versus 1.2 percent growth it predicted earlier. Accounting for about two-thirds of GDP, exports have fallen in the past three years due to tepid global demand and a slowdown in China.
Despite the upside surprise in GDP, the Bank of Thailand (BOT) could still cut rates if growth falters, economists said.
“With likely subtrend growth momentum and baht outperforming regional currencies, we do not think one can rule out another rate cut by the BOT later this year,” Credit Suisse Singapore-based senior economist Santitarn Sathirathai said.
The BOT held rates steady last week but saw higher risks to growth from slowing consumption and investment.
The NESDB revised its GDP growth forecast for this year from 2.8 to 3.8 percent to 3 to 3.5 percent. Growth last year was 2.8 percent.
Tourism and fiscal spending will underpin growth this year, while expected rains in the middle of the year should ease drought, NESDB secretary-general Porametee Vimolsiri said.
In a bid to spur domestic activity, the Thai government has ramped up investment and launched stimulus measures, although big infrastructure projects have been slow to get underway.
In the first quarter, government investment rose 12.4 percent year-on-year, while private investment grew 2.1 percent.
Tourism, accounting for 10 percent of GDP, has been a rare bright spot. Anti-Chinese sentiment in Taiwan and Hong Kong has resulted in more Chinese tourists going to Thailand.
Tourist numbers in the first quarter jumped 15.5 percent, and the NESDB predicts a record 33 million visitors this year.
“It’s the case of more Chinese who travel to Taiwan coming to Thailand, maybe about 5 percent more,” CCT Group president Vichit Prakobgosol told reporters. The group brought 300,000 Chinese tourists to Thailand last year.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts