- Posted August 22, 2013 by
Thailand not in economical recession
With reference to a news report on the recession of Thai economy following an announcement of National Economic and Social Development Board that the GDP had dropped by 0.3 percent in the second quarter compared to the previous three months which led to a conclusion that Thai economy has entered a recession period, Suranand explained that economic growth rate could be compared using the QoQ (Quarter on Quarter) or YoY (Year on Year) measures.
Based on the YoY analysis, growth rate for the first quarter of this year is at 5.4 percent, and the second quarter, 2.8 percent, which means Thai economy is still growing though on a slower pace.
The conclusion that Thailand is facing economic recession is misled by partial information using only the QoQ measure.
Why using the QoQ measure resulted in negative figures?
Growth rate of the first two quarters of 2013 reflects economic normalization process as seen in the following 3 factors:
1) Production capacity of automotive industry has been declined from the higher-than-usual rate of 2012 to its normal condition. So, this is definitely not a recession.
2) Budget disbursement during the first quarter of FY2013 (October – December 2012) or the fourth quarter of the calendar year 2012 was at a record high due to the Government’s measure to expedite public/state enterprises budget disbursement. This has been normalized in the following quarter.
3) Global economic crisis, particularly in the US and EU, has continuously impacted the export sector of Thailand and the region.
Negative figures resulting from the QoQ analysis have occurred in the past during the fourth quarter of 2008 and the first quarter of 2009, at minus 4.8 percent and 2.6 percent respectively.
However, this time is a totally different situation because the adjustment was made from a very high base in the fourth quarter of 2012 until economic growth rate has become normalized, whereas the growth rate in 2009 was from normal to unusually low. The Democrat Government, then, had made an attempt to solve the problem at hand with the 2000-Baht check distribution scheme which did not do any good to the enhancement of national competitiveness.
Have all economic factors been affected?
Only export has been slow down as a consequence of global economic crisis, particularly in the US and EU. Since Thai economy largely depends on exportation, the impact seems great. The Government, therefore, emphasizes the policies that support domestic consumption to ensure domestic circulation of funds such as promotion of OTOP and SMEs, and access of fund resources for the people of all levels.
Suranand added that Prime Minister Yingluck Shinawatra has placed importance in stimulating domestic consumption through the 2-trillion Baht infrastructure development, and the 3.5 billion-Baht water management projects which would not only create employment, generate incomes, spread prosperity, and reduce disparity, but also enhance national competitiveness.