Thai GDP grows at fastest pace in 4 years
By Pisinee Leelafaungsilp - ASEAN Research Analyst
Thailand’s real GDP grew by 3.7% YoY in the second quarter, recording the highest quarterly pace in more than 4 years. Thailand's economy in Q2-2017 was mainly driven by higher consumption expenditure (both private and government) as well as sound external sector, as exports recorded a record-high pace of growth in May. Due to higher crops and livestock production, agricultural sector saw a robust 15.8% annual growth which also contributed to the economic expansion.
Following the negative real GDP growth in Q1-2014 (due to the 2013-14 Thai political crisis), the local economy quickly returned to positive territory with a stable growth pace, improving by 1% in 2014, 2.9% in 2015 and 3.2% in 2016. The strong growth has been continuously driven by private consumption and trade volume surplus which combined accounts for approximately 65% of nominal GDP.
Private consumption in Q2-2017 increased by 3% YoY, decelerating slightly compared to the previous quarter. The annual growth came as a result of increased farm income and higher income in export and tourism sectors. Government spending increased by 2.7% YoY due to higher compensation of employees and social benefit payments. On the other hand, investment (gross fixed capital formation) in Q2-2017 increased just by 0.4% YoY compared to 1.7% in the first quarter. Private investment increased by 3.16% mainly due to the expansion in machinery and other equipment. However, favorable growth in private side was offset by 7% contraction in public sector investment. In addition, vibrant international trade supported the economic expansion as in the second quarter of the year Thai’s economy maintained its trade surplus with increasing pace of growth in both exports and imports.
On industry level, agricultural sector reached 15.8% YoY growth compared to 7.7% in the first quarter. This robust growth could be attributed mainly to the continuous expansion of crops and higher livestock production. On the other hand, non-agriculture industries grew 2.75% YoY, compared to 3.1% YoY in Q1-2017. The slower pace was due to the deterioration of secondary industries such as electricity, construction and manufacturing. However, the growth was supported by hotels and restaurants, transport and communication industries.