The economy suffered a 0.2-per-cent contraction in the first quarter amid the lowest consumer confidence in 12 years after the prolonged political unrest, said the Fiscal Policy Office.
However, the FPO maintains its estimate for this year’s economic growth at 2.6 per cent on expectation of improvements for the rest of 2014.
FPO director Kulaya Tantitemit said economic indicators slowed, as expected, in the first quarter, but that gross domestic product should now rebound. GDP is forecast to expand 0.4 per cent in the current second quarter, 2.8 per cent in the third quarter and 7.3 per cent in the fourth.
She said this year’s 2.6-per-cent growth target, likely driven by exports and government spending, was based on an assumption of a return to political calm and renewed confidence in the fourth quarter.
“We expect that the first quarter saw a bottoming-out of this year’s economic performance. That means the economy will not shrink in the second quarter, as the signs are good for exports. Shipments are expected to expand 5 per cent for the whole year.”
She said that amid the prolonged political problem, private consumption continued to slow, as reflected by March value-added-tax revenue shrinking 1.2 per cent and that for the first quarter contracting by 0.2 per cent. VAT on imports contracted 7.4 per cent, while that on domestic consumption increased 6.0 per cent.
March motorcycle sales contracted by 18.1 per cent and the first-quarter figure shrank 20.8 per cent.
Consumer confidence in the first quarter was the lowest in 12 years.
Private investment continued to see signs of contraction. Property tax revenue in March shrank 9.4 per cent and that in the first quarter contracted 6.6 per cent.
Cement sales in March shrank 3.5 per cent and those in the first quarter shrank 2.4 per cent. Imports of capital goods in March continued to contract, by 15.2 per cent, and those in the first quarter shrank 14.1 per cent.
Exports in March contracted 3.1 per cent and those in the first quarter shrank 1.0 per cent, given drops in exports of fuel, agricultural and agri-industrial products.
The manufacturing production index in March contracted 10.4 per cent and that in the first quarter shrank 7.0 per cent after drops in production of automobiles, hard disk drives, petroleum products, home electrical appliances, and canned and frozen seafoods. The March index fell to its lowest point since July 2009.
The number of foreign tourist arrivals in March totalled 2.1 million, a 9.4-per-cent contraction year on year, due mainly to drops in the number of tourists from Southeast Asia. The overall figure contracted 5.85 per cent in the first quarter.
However, the agricultural production index in March expanded 1.6 per cent and that in the first quarter rose 2.9 per cent on increases in production of major crops, particularly rubber and corn.
On the economic stability front, inflation stayed at 2.0 per cent in the first quarter of this year, with the unemployment rate at 0.9 per cent. At the end of the first quarter, Thailand’s foreign reserves stood at US$167.4 billion, about 2.8 times the nation’s short-term external debts.