Thailand's economy narrowly escaped recession, as it showed a 0.4 per cent year-on-year growth in the second quarter.
This followed the 0.5 per cent contraction in the first quarter. The data was released today when the National Legislative Assembly started to consider the 2015 budget bill. Junta chief Prayuth Chan-ocha assured all of the commitment towards economic growth and sufficiency.
The Office of National Economic and Social Development Board attributed the second-quarter growth to a pickup in private consumption, in line with the recovery in household confidence following the restoration of political stability.
The actual growth rate should surprise Gundy Cahyadi, DBS economist, who expected only 0.1 per cent growth in the quarter.
In his note, Cahyadi said "While sentiment has been generally better in recent months, data has not reflected any significant turnaround in the economy in the second quarter as yet."
"We continue to expect investment growth to have remained a marked drag to the economy, as also reflected in how poorly import growth numbers have been coming in. As it is, performance should be broadly better in the second half, and we expect the economy to return to the 5 per cent growth by the fourth quarter. Barring a strong upside surprise in export growth in the second half, though."
DBS expects the Thai economy to expand only 1.6 per cent in 2014.
According to the NESDB, private consumption in the second quarter rose 0.2 per cent, against 3 per cent contraction in the first quarter. Minus vehicle purchases, the consumption rose by 3.2 per cent on year, against 2.9 per cent in the previous quarter. Vehicle pruchases dropped for four consecutive quarters, but the contraction pace narrowed to 26.6 per cent in the second quarter after the deepest drop of 39.8 per cent in the previous quarter.
"The consumption expanded above our expecation," said Siam Commercial Bank's Economic Intelligence Centre.
Though private investment contracted by 7 per cent in the second quarter, an improvement was witnessed in the second quarter thanks to the 9 per cent expansion in housing development as well as capital goods investment.
"The economy has bottomed out but it remains fragile in several areas, particularly export and tourism," SCB said. "Meanwhile, agricultural commodity prices remain low against high household debt level. This will pressure household spending. This will assure gradual recovery in the second half of this year."