Country Economic Forecasts > Thailand

Thailand grew by a respectable 0.8% on the quarter in Q2 but, as in previous quarters, the composition of the growth was not as healthy as the 'headline' figure suggested.  Inventories rebounded strongly after a sharp run-down in stocks early this year. And without this development, GDP would have contracted as although consumer spending picked up, investment contracted sharply and exports of goods fell back. Looking forward, it seems unlikely that the economy will be able to escape a prolonged period of modest growth, held back by low levels of confidence in the political and economic outlook and a dull external backdrop. Indeed, despite more than 60% voting in favour of the new constitution, giving considerable powers to a selected senate, the country's political climate remains poor. In addition to the deep fault lines running through Thai politics, there is also concern about isolated terrorist attacks. Several days after the referendum, and coinciding with the Queen's birthday, there were several bomb attacks in tourist resorts in the south of Thailand. In the recent past, tourism in Thailand has recovered quickly from one-off attacks or periods of political turmoil. Provided this attack was indeed a one-off, it may hit August/September arrivals but we should then see a recovery.