NESDB (National Economic and Social Development Board) 3Q12 GDP data showed that domestic spending of both private and public sectors somewhat offset the adverse impact of declining exports and industrial production. The 3Q12 Thai economy therefore managed to grow 3.0 percent YoY, though it slowed from 2Q12, with revised data of 4.4 percent growth YoY.
Overall, the economic slowdown eased on higher domestic spending, as evidenced by rising consumption, private investment and public spending. A favorable domestic spending atmosphere was seen in rising incomes, and on government initiatives that helped boost purchases of durable goods such as cars, as well as with flood recovery work that led to greater demand for machinery. Meanwhile, government spending for consumption and investment grew during FY4Q12. On the external front, however, the global slowdown curbed demand for Thai goods as well as the prices of commodities (especially farm produce), which hindered export recovery, thus also affecting industrial production.
During 4Q12, KResearch forecasts that the Thai economy may fare significantly better YoY due to a low 2011 base when Thailand was hit by catastrophic flooding. The 4Q12 GDP may achieve higher growth than our preliminary projection of 12.5 percent YoY. Looking forward into 2013, under a supposition that Dubai Crude averages no higher than USD110/bbl., we then forecast that the Thai 2013 economy will grow 4.5-5.5 percent (our base case at 5.0 percent), close to the 2012 growth rate. Domestic spending, particularly via government expenditures and investments, would be the main thrust for economic growth.
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