FPO: Q3 looking less dire as ‘swoosh-shaped’ bounce looms

FPO: Q3 looking less dire as ‘swoosh-shaped’ bounce looms

Thailand’s third-quarter economic outlook has better prospects than in the previous quarter after improved economic indicators in July, says the Fiscal Policy Office (FPO).

The economy already bottomed out after consecutive GDP contractions in the first two quarters, with economic indicators in July suggesting the third-quarter outlook will improve because of government stimulus measures, said FPO deputy director-general Wuttipong Jittungsakul.

The private consumption indicator in July also suggested a recovery from the second quarter, Mr Wuttipong said.

“Most economic indices improved [in July] from the previous month, therefore the third-quarter economic outlook is expected to improve from the second quarter,” he said. “The economic recovery is anticipated to be swoosh-shaped, similar to the Nike logo.”

Despite the rosier outlook, the FPO is maintaining its full-year projection for Thailand’s economy at a 8.5% contraction after a first-half decline of 6.9%.

GDP shrank by 12.2% year-on-year in the second quarter, the biggest decline since the Asian financial crisis of 1997-98, as trade and tourism were sapped by the pandemic.

GDP fell by 1.8% year-on-year in the first quarter as the outbreak began, bringing adverse effects for business activity.

In July, the private consumption indicator improved slightly from June, with newly registered motorcycles up 31.4% month-to-month. The consumer confidence index improved for a third straight month to 42.6.

Exports in US dollar terms expanded by 20.8% month-to-month after June’s 16.4% growth, with export products such as cassava, palm oil, canned tuna, frozen pork, computers and accessories, home appliances, rubber gloves and gold seeing strong expansion.

Some of July’s economic indicators expanded at a slower pace or saw a deeper contraction from June.

As part of the private investment indicator, cement sales rose by 1.3% month-to-month, down from June’s 2.9% growth.

Tax revenue collected from real estate businesses contracted by 3.9% month-to-month, narrowing from a 6.6% contraction in June.

Imports of capital goods fell by 25.8% month-to-month in July, widening from a 9% contraction in the previous month.

Commercial vehicle sales contracted by 15.4% month-to-month, bettering June’s 26.4% contraction.

The unemployment rate rose to 2% of the total workforce in July.