It was only recently that many were reporting on the traction Thailand economy was making as it finally began to get over the widespread devastation caused by last year’s floods. The country’s economy had begun to show signs of improvement in the first three months of 2012, with manufacturers within the country restarting production and boasting of raised demands.
With production restarted and supply chains reinitiated, the National Economic and Social Development Board (NESDB) had predicted growth for the country to be between five-and-a-half and six-and-a-half percent. However shipments have fallen by nearly four percent from the previous year, with some analysts suggesting a further drop is hoped to be avoided, but wouldn’t be unexpected.
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An economist at Credit Suisse in Singapore, Santitarn Sathirathai, commented:
“The magnitude of the fall surprised even us. I think this reaffirms our earlier belief that growth risks will be renewed again in the second quarter.”
Deputy Commerce Minister, Poom Sarapol, said:
“We still think exports will rise 15 percent, despite the problems in Europe, because demand from other markets are still growing and should help offset Eurozone weakness.”
Thailand’s economy relies on international trade to sustain growth, especially in relation to Europe and the United States, with exports contributing over half of the country’s gross domestic product. Since the flooding and the ensuing shut-down in production, many businesses across the globe have secured alternative suppliers.
Now that production is back up, the challenge Thailand faces is not only to try and win back previous contracts, but to acquire more, a difficulty compounded by the economic problems being experienced elsewhere.
“The key factor to monitor is domestic demand, and whether investment and consumption will pick up in a strong enough manner to offset export weakness.”