Thailand Economy Exits Yearlong Recession on Exports

By Suttinee Yuvejwattana

Feb. 22 (Bloomberg) -- Thailand’s economy emerged from a
yearlong recession last quarter on increased exports and
government spending, adding pressure on the central bank to
start withdrawing monetary stimulus.
Gross domestic product rose 5.8 percent from a year earlier
in the three months to Dec. 31, after contracting a revised 2.7
percent in the previous three months, the government said today.
The median estimate of eight economists in a Bloomberg News
survey was for a 4.3 percent increase. Southeast Asia’s second-
largest economy contracted 2.3 percent last year.
Thai consumer confidence rose to the highest level in 21
months in January and companies including Thai Union Frozen Pcl
are forecasting record profit. The economy may expand as much as
4.5 percent this year, the government said today, though it
warned that political unrest remains a threat to growth.
“We have no more time to waste,” Ampon Kittiampon,
secretary-general at the National Economic and Social
Development Board, the government’s economic advisory body, said
today. “If political unrest emerges again we may not be able to
win back confidence.”
Supporters of former Prime Minister Thaksin Shinawatra
stepped up rallies last month after the Supreme Court said it
will rule Feb. 26 on the government’s request to confiscate
about $2 billion of his assets. The government said Feb. 13 it
would boost security around key government buildings after a
bomb exploded near Prime Minister Abhisit Vejjajiva’s office and
another was found in the compound of the Supreme Court.
Stocks Slide on Politics
Thai stocks lost 5.2 percent in January, the worst monthly
performance since October 2008, on concern that political risk
will hamper growth. The benchmark SET Index gained 0.7 percent
to 705.26 at 10:01 a.m. in Bangkok. The baht rose 0.1 percent to
33.14 per dollar, according to data compiled by Bloomberg. The
currency reached 33.00 earlier, the strongest level since Feb. 3.
“The Thai economy may be behind the region a little bit,
but we already see signs of recovery,” Frederic Neumann, a Hong
Kong-based economist at HSBC Holdings Plc, said before the
announcement. “The only thing holding the nation back is
lingering political uncertainty.”
Asian economies from China to Vietnam are picking up speed
after policy makers worldwide boosted spending and slashed
borrowing costs to counter the global slump. Thai exports, which
are equivalent to about 60 percent of the economy, had the
biggest gain in 18 months in January, while industrial
production increased the most on record in December.
Faster 2010 Growth
The economy grew 3.6 percent in the fourth quarter from the
previous three months, the government said today. That compared
with the 1.3 percent median forecast of seven economists
surveyed by Bloomberg News.
The economy may grow 3.5 percent to 4.5 percent this year,
Ampon said at a briefing on the GDP report in Bangkok today.
That compares with as much as 4 percent growth forecast in
November, the economic agency said today.
“We’ve been surprised at the continuation of the
rebound,” said Richard Han, chief executive officer of Hana
Microelectronics Pcl, which makes parts for computers and mobile
phones including Apple Inc.’s iPhone. “This is genuine demand
coming, particularly from the Asian economies.”
Demand has been “very, very strong” in the computer,
automotive and consumer electronics sectors over the past few
quarters, Han said in an interview with Bloomberg Television in
Bangkok today.
Less Need for Stimulus
Bank of Thailand Governor Tarisa Watanagase on Feb. 1 said
the central bank may start winding back stimulus this year as it
is less needed. The bank predicts the economy may grow as much
as 5.3 percent this year after a 2.7 percent contraction in 2009.
Political unrest and a weaker-than-expected global recovery may
cap growth prospects, the central bank forecast last month.
Thailand has refrained from raising its key interest rate
from a five-year low of 1.25 percent even as Australia and
Vietnam increased borrowing costs late last year to counter the
threat of surging consumer and asset prices. Inflation that
accelerated to a 16-month high in January is in line with
expectations and isn’t a concern, the central bank has said.
Abhisit said Jan. 30 “a strong recovery is underway.”
Still, the government will wait to make sure the recovery is
sustained before withdrawing its stimulus packages. Finance
Minister Korn Chatikavanij said Feb. 12 the government will
maintain fiscal measures to spur the economy through next year.
Abhisit has managed to stay in power for more than a year,
enabling him to implement a 116.7 billion baht ($3.5 billion)
stimulus package last year and push through a 1.3 trillion baht
three-year investment plan to revive the $261 billion economy.
“Any political unrest will damage our image, tourism and
the economy,” Santi Vilassakdanont, chairman of the Federation
of Thai Industries, said. “I just hope there is no more
violence this time as we have all experienced and most of the
people in this country don’t agree with that.”
To contact the reporters on this story:
Suttinee Yuvejwattana in Bangkok at
Suttinee1@bloomberg.net;




Last Updated: February 21, 2010 22:38 EST