GDP growth forecast gets scaled up to 3.7% for year

Growth in gross domestic product (GDP) accelerated from 3.3 per cent in the first quarter, Porametee Vimolsiri, secretary general of the National Economic and Social Development Board (NESDB), said at a press conference yesterday.
The faster rate of growth of in the second quarter was driven by exports, household consumption and private investment, the agency said.
“The real GDP growth rate in second quarter was higher than expected,” said Porametee.
Private investment grew 3.2 per cent, the fastest clip in the past four quarters, after contracting 1.1 per cent in the first quarter. Public investment shrank 7 per cent after growing 9.7 per cent in the first quarter.
Second-quarter consumption expanded 3 per cent compared with 3.2 per cent in the year’s opening quarter, while exports in dollar terms grew 8 per cent, against 6.8 per cent in the prior quarter. Private investment between April and June was driven by exports and public infrastructure investment.
“Expansion of private investment is expected to continue due to public investment and higher export growth. The property sector also showed signs of expanding,” Porametee said.
On the production side, the farm sector surged by 15.7 per cent, up from 5.7 per cent in the previous quarter. However, growth in the non-agricultural sector growth dropped to 2.7 per cent, compared with 3.1 per cent in the first quarter. Among the sectors showing higher growth were transport and communication, hotels and restaurants, and wholesale-retail trades, achieving rates of 8.6 per cent, 7.5 per cent and 6 per cent, respectively. 
The financial and real estate services grew by 5.1 per cent and 4.1 per cent, respectively.
Second-quarter growth in the manufacturing sector eased to 1 per cent, from 1.3 per cent, due to declining production in textiles, motor vehicles, cement, metals and tobacco. Construction declined by 6.2 per cent due to a contraction in government construction resulting from a fall in budget disbursements. Electricity, gas and water supply receipts dropped by 1.4 per cent due to a fall in consumption by residential users and small and medium-sized enterprises 
However, the upward revision in the forecast for full-year GDP growth is founded in the surprisingly strong growth in private investment and exports.
The NESDB also revised up its estimate for export growth to 5.7 per cent for the full year, from 3.6 per cent, in dollar terms due to a sustained global economic recovery. 
However, upward pressure on the baht was expected to persist, with the NESDB expecting the currency to strengthen to 34-35 from the US dollar, from an earlier projection of 35-36.
“The baht would continue to be under pressure but the magnitude of appreciation would not pose a serious threat to the economy,” Porametee said.
Uncertainty over United States economic and trade policies under the leadership of President Donald Trump has been resulted in a weak dollar and, conversely, a strong baht. 
Thai exporters have raised their concerns over exchange rate movements and the potential for a strong local currency to disrupt growth in overseas shipments.
However, the NESDB remains optimistic, prompting the upward revision in its forecast for export growth.
Porametee said there was a chance the US dollar would appreciate if Trump were to succeed in increasing spending on infrastructure – a key campaign promise. Trump’s plans for increased public spending have been blocked by the Congress on concerns they would propel the nation’s public debt to out-of-control levels.
Other risk factors for the Thai economy include the possibility of more natural disasters, with a reminder of their economic impact coming after a tropical storm stuck many provinces in the third quarter. More floods could hit consumption and economic growth as a whole. “The overall risks to outlook of the economy, however, have decreased,” Porametee said.

Don Nakornthab, senior director of the economic and policy department of the Bank of Thailand (BOT), said the 3.7 per cent year-on-year rise in the second quarter came in higher than the central bank’s estimates.
Don also viewed exports of goods and services as playing a key role, in line with an improving global economy, along with the rises in public and private expenditure and private-sector investment. “We expect the rebound in the economy will be sustained, but with some risks to be monitored. These include the uncertainties over the economic and trade policies of the US government, and geopolitical tensions that may impact the economies of trade partners,” he said, while citing as another positive the government investments in infrastructure mega-projects.