Posted on 21 May 2013
Thailand's economy contracted more than expected in the first quarter of 2013 from the previous three months and economists said this raised the chances of an interest rate cut next week to hold down the baht to provide support for the export sector.
Finance Minister Kittirat Na Ranong repeated his call for a rate cut after data yesterday showed the economy shrank by a seasonally-adjusted 2.2% in January-March from the previous quarter. A Reuters poll had forecast a drop of 0.8%.
The National Economic and Social Development Board (NESDB) said the economy was still 5.3% bigger than a year before but it trimmed its forecast for full-year 2013 growth to a 4.2%-5.2% range from 4.5%-5.5%.
The NESDB does not provide much quarter-on-quarter data but it outlined a slowdown compared with 2012, especially the year's final months when the economy was powered by investment and consumer spending as Thailand picked itself up after the 2011 floods.
Private consumption, for example, grew by 4.2% in January-March from a year before against 12.4% in the last quarter of 2012.
“It was a little disappointing, but we don't see a need to revise our 4.8% 2013 GDP growth estimate too markedly,” said Gundy Cahyadi, an economist with OCBC Bank in Singapore.
