Thai economy defies SARS to grow 6.7 percent in Q-1
Thai economy defies SARS to grow 6.7 percent in Q-1
Agence France-Presse, Bangkok
Thailand's economy defied the SARS crisis to grow 6.7 percent in the first quarter, a much stronger than expected performance that prompted authorities to raise the 2003 forecast by a full percentage point to 4.5-5.5 percent on Monday.
However, the National Economic and Social Development Board (NESDB) said SARS would undercut growth in the second quarter, when the worst of the downturn in tourism and services would be felt.
"The loss is concentrated mostly in the second quarter... but the impact is expected to dissipate in the third and fourth quarters," said NESDB secretary-general Chakramon Phasukvanich.
The government advisory body said gross domestic product (GDP) in the first quarter compared to the same period a year earlier was supported by increases in production and capacity utilization, and improved employment conditions.
Chakramon said expectations for full-year growth had been increased from an earlier forecast of 4.0-5.0 percent due to a range of government measures to promote economic activity.
"The revision in full-year GDP growth was also driven by the significantly stronger-than-expected first quarter GDP," he said.
Chakramon said GDP was underpinned by relatively low interest rates and a less-than-expected impact from SARS, or Severe Acute Respiratory Syndrome (SARS), which shook the region's economies.
The impact on the Thai economy from the war in Iraq was also less severe than expected, he said.
The number of foreign tourists dropped by 12.5 percent in March amid the SARS scare but exports continued to increase rapidly and oil prices declined to the stable level of US$25-26 per barrel.
However, SARS is expected to cut GDP growth in the second quarter, and cause net trade and services income to drop by about 40.78 billion baht, or 0.7 percent of GDP, over 2003, Chakramon said.
Net travel income is also expected to decrease by 32.36 billion baht, or 0.55 percent of GDP, during the year.
Nevertheless, the NESCB said GDP growth in the first half of this year would not be lower than 5.0 percent as the disease's spread was limited in Thailand.
Siam FN analyst Amarit Singnarong said the Thai economy would also benefit from pent-up demand which would be unleashed as the SARS scare faded.
"There is strong pressure on the spending side coming up so that helps a lot. It's a matter of keeping confidence at this level," he said.
Tipping growth in the 4.5-5.0 percent range this year, he said his forecast would be "on the low side" if the SARS situation was speedily resolved.
The NESCB said exports are expected to reach $73.2 billion this year, up 9.5 percent from 2002, while imports are seen at $70.7 billion, up 11.5 percent.
The current account surplus is projected at $5.3 billion in 2003, or 3.9 percent of GDP, compared with an earlier estimate of $6.6 billion or 4.9 percent of GDP. Inflation is seen at 1.6 percent.