Thailand economy picking up growth momentum

Driven by private consumption and investments.

Here's more from OCBC:

Thai Q4 GDP growth came in at a robust 18.9% yoy, lifting full-year GDP growth to 6.4% yoy, well above our 5.5% estimate. On a sequentially adjusted basis, we estimate growth at about 2.8% qoq in Q4 2012, reversing the 1% drop seen in the previous quarter. Given the base effect distortion (due to the end-2011 floods), it is really difficult to pick up any significant cues with regards to the growth prospect going forward. Still, we think that the momentum in the both private consumption and investment growth in the country looks modest enough to push for GDP growth at 4.8% yoy in 2013 (up from our initial estimate of 4.3% yoy but still in the lower half of the 4.5-5.5% target range set by the government).

The economic recovery in 2012 has been highlighted by almost equal shares of contribution from both private consumption and investment growth, offsetting the drag from the external demand. Interestingly, this balance has shifted in favor of private consumption in Q4 2012. It is hardly surprising to see investment growth lagging behind that of private consumption, despite GFCF growth penciling in a 23.4% yoy expansion in Q4, its fastest pace of growth in more than a decade. Towards end-Q4, our main concern for the economy had been the risk that negative feedback loop could dampen investment growth in the country as the drag from exports has persisted while capacity utilization rate has recovered to pre-flood levels. Investment growth has actually declined by more than 4% qoq on a seasonally adjusted basis, despite the robust yoy figure. Not surprisingly, business sentiment index has eased off in December 2012, just slightly above the 50 neutral level for the month (and this is unlike the sustained recovery seen in consumer confidence index in Q4 2012).

We still think the economy to be at an important juncture currently because of the risk that further slowdown (or slower than expected recovery) in external demand would continue to hurt domestic manufacturers significantly given that they have just returned to producing at normal pace. Note that the nominal amount of exports in Q4 2012 stood at about 8% lower than the amount recorded in Q3 2011 (before the floods hit Thailand), and the slight dip seen in Q4 2012 was slightly concerning going into 2013.