GDP Q2 2008 : +5,3 %

I wrote in june, following the report on GDP for Q1 :

Its’s logic : growth of GDP on Q2 will be lower than 6 %. And Q3 and Q4 even worse.

I was right.

The NESDB has just released its report for Q2.

The Thai economy in Q2 2008 grew by 5,3 %, less rapid from 6,1 % in Q1 (revised from 6 %).

This was due to slowdown in domestic demand, particularly government consumption which contracted by 2,4 %.

Household consumption expenditure and investment increased at a lower rate from 2,6 % and 5,4 % in Q1 to 2,4 % and 1,9 % respectively.

Nonetheless, net external demand continued its expansion with exports growing by 9,3 % while imports slowed down to 6,9%. As a result, trade balance registered a surplus in this quarter.

I will update the charts later. But a few comments.

-first why a revision from 6 to 6,1 % on Q1 ? Well, there is something strange. The deflator has been revised… from an already surreal 4 % down to… 3,7 % ! (read here for explanations about deflator). With a high CPI and a super high PPI, it is indeed surreal.

-The deflator will increase on Q3, it’s unavoidable… Therefore, the growth year on year (GDP at constant prices) will be reduced.

-as predicted, private consumption and investment decelerated.

-Once again, exports have saved the day. But the trade surplus is likely to vanish on Q3, due to the oil prices.

-The outlook for Q3 and Q4 remains poor, despite what the NESDB, the government and all the supporters of the boiler room are saying.

Why ? Because Thailand just can’t escape the global environement which is worsening almost on a daily basis (recession there [Danemark]… almost here [EuroZone, UK)… the slowdown of growth in many other countries etc.)

Those who think that the real estate and the credit crisis in the US and in Europe are going to end on Q3 and Q4 are just daydreaming. And those who think that Thailand will escape the global slowdown live in a territory near Wonderland.

Now, that shall not prevent the NESDB to follow the way to Wonderland. 😉

The NESDB has adjusted its 2008 GDP growth projection from 4.5 to 5.5 per cent to between 5.2 and 5.7 per cent. (TOC)

‘If the government pushes forward with its megaprojects, including infrastructure construction, and creates confidence among investors, our GDP [growth] in the last six months of this year is most likely to be no less than 5.2%,” said Mr Ampon (NESDB secretary-general ) (Bangkok Post)

2 solutions : Mister Ampon is a Wonderland citizen (and proud of it) or… a perfectly dishonest man.

August 26… I would like to ask Mister Ampon : where are the mega projects ? Where are the cranes ? Are the contracts already signed ? Nada. Nil. Zero.

There is absolutly NO WAY for the mega projects to bet a net contributor for GDP on Q3 and Q4.

The authorities are gambling on the 6 months “rescue package”  (tax cuts on diesel, and other goodies) along with the “zimbabwe fight against inflation” (just say no when a producer wants to increase its prices…). It’s pathetic.

This policy is short sighted… It’s just “Mister Executioner, give me one more quarter please“…

And what they will do in 2009 ?

Ah yes I forgot, in 2009, the global crisis will be over, thai businesses and individuals will buy cars like there is no tomorrow, the mega projects will give us hundred of km of new train lines, prices of house will double, oil prices will go back to 20 dollars per barrel, and we will all win the lottery. Sweet. 😉

The party is about to end.

2 Responses to “GDP Q2 2008 : +5,3 %”


  1. 1 MSB 26 August 2008 at 7:47 am

    I was waiting for you to post on this. Really dissapointing number. I was wrong in some of my comments in previous posts when i was optimistic for a strong Q2. Domestic demand is falling fast and the increase in exports is not offsetting. Investment spending also fell sharply.

    I have taken off my rose tinted glasses…..

  2. 2 ThaiCrisis 26 August 2008 at 8:14 am

    Nice to hear from you MSB. 😉

    The chart is scheduled for tomorrow, along with some comments about the revision of growth on Q1 (from 6 to 6,1%). Deflator manipulation.

    Because actually… the nominal GDP was REVISED DOWN on Q1 !

    But because the deflator was revised down too, the % growth (calculated on real GDP) finished higher.

    Little girlie make up… 😉

    Anyway. Things will probably turn sour on Q4.

    I stick to my first comments, when the report for Q1 was published. Even though the strong exports recorded in july (and probably august too) could give some relief on Q3.


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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.


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