Mobile phone vendors wait for customers at a shopping centre in Bangkok. Thailand’s private consumption and investment slipped in July, central bank data showed yesterday.
Reuters
Bangkok
Thailand’s private consumption and investment slipped in July, central bank data showed yesterday, adding to the pessimism over weak exports that suggests a still fragile economic recovery.
Southeast Asia’s second-largest economy is struggling to recover after an army coup in May 2014 ended months of street protests with exports contracting every month this year while consumption has been curbed by high household debt.
The Bank of Thailand’s private consumption index for July fell 1.1% from June, its biggest monthly drop in a year. In June, the index was revised to a 1.4% rise from 0.9%.
Its index for private investment eased 0.1% in July, the same as in June, which was revised from a 0.2% rise.
“Overall economic activities in July were weak. Only the tourism sector and public spending continued to expand well,” the BOT said in a statement.
The BOT recently said the economy this year could grow less than 3% projected earlier, with exports falling more than the forecast 1.5% – marking a third straight year of contraction. It is due to give new forecasts on September 25
The central bank said annual exports slipped 3.1% in July. Shipments are equal to over 60% of the economy. Industrial goods accounted for 78% of total exports in July, when factory output fell a fifth straight month.
But there are hopeful signs of some stabilisation in exports as the auto industry manufactures new models, analysts said.
“We foresee a more encouraging export outlook although imports will likely stay poor largely due to oil-related factors for the remaining year,” said Charnon Boonnuch, economist at Tisco Securities.
The government hopes a weak baht, which has dropped about 8% against the dollar this year, will help exports.
Domestic demand has been sluggish while low commodity prices have cut farmers’ income and government spending has been slow.
In a bid to lift consumption, a key growth engine, the junta will discuss on Tuesday stimulus measures, including additional funds for low-income people.
“The measures will help alleviate short-term problems and shore up confidence. But practically, the government also needs to be careful about (borrowers’) debt servicing ability,” BOT Governor Prasarn Trairatvorakul said yesterday.
He said annual second-half growth should be similar to the first half’s 2.9%.
In April-June, the economy grew 0.4% from the first quarter and 2.8% from a year earlier. Growth was a mere 0.9% in 2014.
