Q2 GDP could hit 8%

Sathit Rangkasiri, director-general of the Fiscal Policy Office, said yesterday that economic indicators in June showed continued improvement. While exports were up in all categories, domestic consumption and private investment also advanced, which resulted in tax collections rising from the previous month.

Foreign tourist arrivals resumed earlier than expected, and the June figure contracted only 1.1 per cent on year. The figures this month has increased 11.5 per cent so far, thanks to arrivals from China and India. More European travellers are expected later this year.

"The indicators in June were better than expected, particular the tourism sector. The sector contracted only 3.6 per cent in the second quarter, against the expected shrinkage of 15-20 per cent. This will help push the quarterly GDP. Although GDP growth may slow from the first quarter, it should expand at no less than 8 per cent," he said.

Finance Ministry spokesman Ekniti Nitithanprapas said the outlook is positive with huge capital goods imports in June. Consumer confidence has rebounded, as reflected in higher value-added tax and automobile and motorcycle sales figures.

"The impact from the political turbulence was less severe than expected. Growth should continue in the third quarter, thanks to exports. However, external factors remain in focus as well as several countries' attempts to cut public spending, which could hurt Thailand's exports," he said.

When the ministry reviews its 2010 economic growth forecast in September, there is a chance that the forecast could be revised upward, he said.

The current projection is 3.5-4.5 per cent. The Bank of Thailand earlier upgraded the estimate to 6.5-7.5 per cent from 4.3-5.8 per cent.

The budget could start balancing faster than expected in 2013, as until then GDP could expand by at least 4.5 per cent per year while public debt would definitely not hit 60 per cent of GDP.