Thai third quarter GDP up by 7.7 percent

Thai third quarter GDP up by 7.7 percent

BANGKOK (Reuters): The Thai economy grew at its fastest rate for four years in the third quarter, exceeding market expectations, a government think tank said on Monday.

The National Economic and Social Development Board (NESDB) said in a statement that Thai gross domestic product (GDP) expanded by 7.7 percent in the July-September period, up from a revised 3.3 percent growth in the second quarter.

The last time the Thai economy grew as fast was in the third quarter of 1995 when GDP expanded 9.7 percent year-on-year.

The NESDB had previously estimated the economy grew by about 3.5 percent in the second quarter.

"These are good figures which should send positive signals to the market," said Nuchjarin Kasemsukworarat, economist at SCB Securities Co.

Nuchjarin told Reuters the strong year-on-year growth for the quarter was mainly caused by a sharp contraction of GDP in the third quarter of last year.

In the third quarter last year, GDP plunged by 13.6 percent from a year earlier, the most severe quarterly contraction experienced in 1998.

"You would see a large growth rate for the Q3 GDP because the last year's base was very small, the largest decline among four quarters," she said.

Kenneth Ng, head of research at ING Baring Securities in Bangkok, said the data came in above expectations:

"I would say it was mainly led by the sharp rise in the manufacturing production index and a rise in exports."

"This should not come as a surprise to anyone but it is certainly higher than what we had expected. Our house view was at 6.5 percent for the third quarter and seven percent for the fourth quarter," he added.

In the July-September quarter, the manufacturing sector grew 17.4 percent year-on-year, while the agricultural sector contracted 0.2 percent against the same period a year ago, the NESDB data showed.

"For 1999, we expect GDP to grow between four and five percent. This should help improve market sentiment," Ng said.

The NESDB forecast Thailand would show GDP growth of about four percent year-on-year in the fourth quarter of 1999. This would bring overall economic growth for the year to about 4.1 percent, it said.

Growth for 2000 was estimated at 4.4 percent year-on-year.

The NESDB said it had revised its estimate for the contraction of the economy in 1998 to a GDP decline of 10.4 percent year-on- year. It had previously put the decline at around 10.0 percent.

That decline, which followed the collapse of the Thai baht currency in July 1997, has been reversed sharply this year.

In the first nine months of 1999, the economy grew about 4.0 percent against the same period in 1998, the NESDB said.

Maris Tarab, head of research at KGI Securities One Plc, said his view on 1999 GDP growth was in line with the NESDB's at 4.1 percent.

Thai third quarter growth figure was towards the upper end of expectations, he said.

"Any figure within the market expectations range of between over five percent and 7.5 percent is OK," he said.