Thailand takes slower boat with China
IT’S NOT JUST China that’s hurting – other big economies in the region are feeling the impact of sluggish economic growth, including southeast Asia’s second-biggest economy Thailand.
But like China, it is still registering the kind of growth rates that European economies such as Ireland can only dream of, despite the European debt crisis and unconvincing growth in the US.
Gross domestic product in April to June grew a seasonally-adjusted 3.3 per cent from the previous quarter and 4.2 per cent from the same period a year earlier, while economists had expected growth of less than 2 per cent.
Strong domestic consumption and investment is managing to buoy the overall economy, and the country seems to be recovering well from devastating floods in the fourth quarter of last year.
Prime minister Yingluck Shinawatra, sister of ousted PM Thaksin Shinawatra, has managed to steer a politically neutral course and focus on the economy, especially as the country recovers from the floods, the country’s worst in 70 years.
At the same time, the government in Bangkok has signalled that economic growth in the second half of this year may be weaker than previously forecast.
Thai GDP is forecast to expand 5.5 per cent to 6 per cent, compared with a previous growth range of 5.5 per cent to 6.5 per cent, Arkhom Termpittayapaisith, secretary-general of the National Economic and Social Development Board, said last week.
The key to the lower forecast is the European debt crisis, which is hitting exports. The forecast for export growth has been cut to
7.3 per cent from 15.1 per cent on expected lower European demand.
The strength of southeast Asian economies in the past few months has many investors looking more closely at the former Asian Tigers as investment locations, especially as there is a growing perception that China is not offering good value these days and countries such as the Philippines and Malaysia are easier to do business in.
Thailand, Malaysia and Indonesia all reported accelerated growth in the second quarter as policymakers implemented fiscal stimulus programmes.
Meanwhile, the Asian Development Bank reckons that Burma’s economy may grow by up to 8 per cent net every year for the next decade as inflation remains low and the government increases trade ties with neighbours China and India.
The Burmese economy is about 10 per cent the size of Thailand’s, but a wave of higher investment is expected because of a series of recent political reforms.