Thai rebound finally takes hold

       The Thai economy emerged from the recession in the second quarter, thanks to a pickup in government spending.
       The National Economic and Social Development Board said the Thai economy contracted 4.9% in the second quarter from the same period last year,a slower decline than the 7.1% yearon-year contraction in the first quarter.
       The economy posted 2.3% growth in the second quarter from the end of March on a seasonally-adjusted basis,compared with a 1.8% contraction quarter-on-quarter in the first three months of the year and a 5.9% decline in the fourth quarter of 2008.
       NESDB secretary-general Ampon Kittiampon said the economy was clearly on the road towards recovery.
       According to the state planning agency, government consumption rose 5.9%in the second quarter of this year from a year earlier, an increase from a 3.6%year-on-year rise in the previous quarter.Public investment rose 9.6% year-onyear after contracting 9.1% in JanuaryMarch due to accelerated disbursals by the central government, local governments and state enterprises.
       However, agricultural production decreased by 2.7% year-on-year compared with a rise of 3.4% in the first quarter due mainly to the decrease of major crop production such as paddy,sugarcane, and oil palm.
       The non-agricultural sector also dropped by 5.0% year-on-year, compared with a fall of 8.1% in the previous quarter.
       Sectors with favourable growth were construction and financial intermediation with increases of 2.5%and 5.6%.
       Household consumption improved slightly with a drop of 2.3% after contracting by 2.5% in the first quarter partly due to a lower unemployment rate, lower inflation and fuel prices.
       "The Thai economy has passed the lowest point. There are signs of recovery in the second quarter in terms of jobless figures, government investment and private construction," he said.
       But he forecast the economy would continue to contract in the third quarter before moving into positive territory in the last three months of the year.
       "The economy in the second half of the year will improve, even though the GDP in the third quarter will shrink due to a limited global economic recovery affecting Thai exports," he said.
       According to the NESDB's the country's economy for the first six months contracted by 6% compared with the same period last year.
       The board also revised its growth forecast for 2009 to -3% to -3.5% from its previous estimate of -2.5% to -3.5%.
       The agency predicted exports would decline 16.3% this year and imports would shrink by 24.2%, with the trade surplus at US$14 billion. Inflation is forecast at -0.5% to -1%.
       Santi Vilassakdanont, chairman of the Federation of Thai Industries, said he was increasingly upbeat on the country's economic prospects in the third and fourth quarters, citing the improving Thai Industries Sentiment Index (TISI) that turned positive in July and the forward-looking TISI index for August to October which exceeds 100.
       "Our economy could recover to zero percent, as purchase orders have resumed, manufacturing is rebounding,and the government's new spending is due in the fourth quarter," he said.