Higher spending boosts recovery
Consumption up as lockdown loosened
The economy gradually recovered in February, mainly supported by higher private consumption and a slower spread of Covid-19.
The Bank of Thailand on Wednesday revealed private consumption shrank by 2.1% year-on-year in February, easing from a 4.5% contraction in the previous month.
On a monthly basis, domestic consumption grew by 3.4% from January, improving from a contraction of 3.6% in January.
Chayawadee Chai-Anant, senior director of the economic and policy department, said higher private consumption is largely thanks to improvement in all spending categories, especially for non-durable goods because of the relaxation of containment measures as the outbreak situation improved.
The government’s stimulus measures also supported a recovery in household consumption and overall economic activities.
“In February, the traditional trade index picked up significantly, helped by the Blue Flag low-price vendors, increasing economic activities based on the government’s stimulus measures,” she said.
Private investment indicators expanded 7% year-on-year in February, rising from 3.4% in the previous month. On a monthly basis, private investment edged up by 0.8% from January, which recorded a 0.6% contraction.
Recovering private investment was supported by rapid growth in the machinery and equipment category as imports of capital goods accelerated. The improvement was in line with business sentiment and the recovery path of exports.
Investment in construction contracted at a higher rate based on a dip in the sales of construction materials, reflecting subdued activities in the sector.
Ms Chayawadee said the value of merchandise exports in February shrank by 0.2% from the same month last year after January’s 0.3% drop. Excluding gold, the value of exports continued growing by 7% in February from a 25.5% increase in January.
However, she said the labour market remained vulnerable as reflected in the increase in the ratio of jobless claims to total contributors in the social security system. In February, jobless claims were 89,380, rising from 71,592 in the previous month.
Jobless claims among people claiming Section 33 of the Social Security Act increased to 11.10 million in February from 11.05 million in January.
“Despite recovery signs in February, the economic growth rate in the first quarter is expected to remain in contraction, both for a quarter-on-quarter and year-on-year basis,” said Ms Chayawadee.