The yearend painted a mixed picture of economic atmosphere. Amid an overriding concern toward the global economy roiled by the US fiscal cliff (December 28 is the final business day when the US Congress and the White House have yet to reach a fiscal deal) and the Eurocrisis (with risks remaining despite a more stable situation), signs toward healthy domestic spending here, e.g., in consumption and private investment, have emerged thanks to the government's stimulus efforts and post-flood restoration activities.
Brightening economic indicators for October and November 2012 included domestic vehicle sales, which not only boosted automotive production, but also helped support other related industries. In addition, ongoing growth was evidenced in imports of capital goods/ machinery and cement sales, as well as in real estate indicators, reflecting that domestic demand remains a key economic driver during 4Q12. Meanwhile, positive signs have emerged for key trade partners that may accelerate a recovery in some Thai exports, such as electronics, electrical appliances and canned/processed food.
KResearch believes that our economic growth may remain healthy at 13.0 percent YoY for 4Q12, driven mainly by favorable domestic factors and a low 2011 base, thus putting the 2012 full-year growth at 5.0 percent YoY. Looking into 2013, should the global economy survive this juncture amid an overriding concern over the US fiscal cliff, we forecast that Thai exports should resume their role as a key economic growth driver, since domestic spending via private consumption and investment have already peaked out after the end of special incentives at the 2012 yearend.
We therefore believe that our 2013 economic projection range of 4.5-5.5 percent (median at 5.0 percent) remains achievable. However, key risk factors lie in the global economy, oil and other commodity prices in the world's market, as well our domestic political situation and funding sources for government investment and higher costs of production.
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