Thailand’s tourism and fiscal spending up, manufacturing and exports down

The uneven nature of Thailand's sluggish recovery became even more pronounced in May. While tourism continues to grow strongly, up 10.1% m/m on the seasonal adjustment (32.9% y/y; April: 13.2%), private consumption flatlined at -0.4% y/y, down from -0.1% in April, even as non-resident spending surged 53% y/y, up from 30.8% in April, says Barclays. 

Private sector investment weakened, contracting -0.4% y/y, having expanded - albeit meekly - in the six months prior. The weakness in investment came amid a sharp loss of momentum in manufacturing production, which fell -23.3% 3m/3m saar in May (April: -11.3%; March: -0.2%), with non-oil exports also remaining weak at -16.5% 3m/3m saar (April: -14.8%; March: -16.6%).

The government has announced a number of large-scale infrastructure projects, including joint agreements with China and Japan to build new railway lines, but the risk of implementation slippage is high, states Barclays. Indeed, spending has continued to disappoint against the expectations that the military government would jump-start the economy following May 2014's coup.

While exports have remained weak, imports have weakened even more, and this has led to a further widening in the current account surplus, with the surplus for May the highest yet on record at USD2.2bn - 26% higher than the previous record (USD1.7bn in May 2009). Year to date, the cumulative surplus stands at USD11.5bn and appears on track to meet the Barclays's forecast of 7.1% GDP in 2015 (2014: 3.3%; 2013: -0.8%).