Thailand’s economic growth outlook was downgraded as the surge in infections and the slow progress in the vaccine rollout weigh on private spending and tourism.
Gross domestic product grew 7.5 percent year-on-year in the second quarter, reversing a 2.6 percent fall in the first quarter, the Office of the National Economic and Social Development Council said Monday. Economists had forecast an annual growth of 6.4 percent.
On a quarterly basis, GDP growth doubled to 0.4 percent from 0.2 percent in the first quarter. GDP was expected to decline 1.4 percent.
However, the government downgraded its growth projection to 0.7-1.2 percent this year from 1.5-2.5 percent projected earlier. The Bank of Thailand expects an annual growth of 0.7 percent for 2021.
The surprise rise in Thai GDP is unlikely to be repeated this quarter as cases surge and the vaccine rollout makes only slow progress, Gareth Leather, an economist at Capital Economics, said.
The tourism sector is still on its knees, meaning any recovery further ahead is set to be slow, Leather noted. The economist continues to expect further easing from the Bank of Thailand.
The expenditure-side breakdown showed that private consumption increased 4.6 percent annually, in contrast to the 0.3 percent fall a quarter ago. Meanwhile, government spending growth slowed to 1.1 percent from 2.1 percent rise in the first quarter.
Gross fixed capital formation expanded 8.1 percent, faster than the 7.3 percent rise in the first quarter.
The external sector at current market prices recorded a deficit of THB 16.5 billion, sourced by a surplus in goods with a value of THB 304.6 billion and a deficit in services with THB 321.1 billion.