Cargo container ships line up at Bangkok port. Robust exports were a key engine for the economy in the third quarter.
Thailand`s economic growth is expected to expand by 3.7-4% during the three months to September mainly because of stronger growth in exports and tourism, say economists.
Charl Kengchon, managing director of Kasikorn Research Center (K-Research), forecast the economy grew 3.8% year-on-year during the third quarter, up from 3.7% in the second quarter.
"The stronger growth forecast is mainly based on continued growth in external demand supported by the global economic recovery, as seen in the robust growth in exports and tourism," he said.
Merchandise exports grew stronger than most expected at 12% in the third quarter, up from 10.9% growth in the second quarter.
For tourism, the effect of the crackdown on illegal tourism operation is minimal, reflected in the strong recovery in tourist arrivals since late last year, said Mr Charl.
He said domestic demand in the third quarter also improved, as seen by the continued improvement in private consumption and government expenditure.
Private consumption indicators grew 1.9% in the third quarter, matching growth in the second quarter, while government expenditure rose by 13.3% in the period, up from a 3.8% contraction.
However, concerns remained for farm income, which saw downward pressure from softer agricultural prices and the effect of the recent floods in the Northeast.
During the three months to September, farm income shrank 2.6%, down drastically from 15.9% growth in April-June.
K-Research is expecting 3.7% full-year growth both this year and in 2018.
Don Nakornthab, senior director of the macroeconomic and monetary policy department at the Bank of Thailand, said earlier economic growth in the third quarter could expand by 4% year-on-year supported by robust export growth.
The National Economic and Social Development Board is due to announce the July to September reading today.
Tim Leelahaphan, an economist for Thailand at Standard Chartered Bank, said the economy is expected to improve in the third quarter driven by two main engines: merchandise exports and tourism.
Standard Chartered forecasts GDP to expand 3.8% in third quarter year-on-year, up 0.6% from the second quarter on a seasonally adjusted basis.
"Exports and tourism will remain the heroes in the third quarter, but the interesting point is domestic demand also showed signs of recovery as well," said Mr Tim.
He said consumption on durable goods, mainly cars, continued to recover in the third quarter while manufacturing production also grew well in the period.
State spending accelerated in the third quarter as it is the final quarter of the fiscal year, said Mr Tim.
"However, private investment remained sluggish in the period and it is expected to be that way through the next year," he said.
The bank projected the economy to grow 3.6% this year and 4.3% in 2018.
There is a good chance GDP growth in the third quarter would breach 4% year-on-year, the strongest in 4½ years, said a recent Credit Suisse report.
"Monthly economic figures for the third quarter showed good momentum on industrial production, as well as improved demand with robust exports and recovering domestic spending, especially in consumption," said the report.
In the third quarter, non-durable goods consumption has clearly recovered from a slump while consumer spending is expected to improve further in the fourth quarter, said the report.
The report said real GDP should accelerate to over 4% in the second half, which will result in 3.8% full-year growth for this year.
By Bangkok Post
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