Thailand unexpectedly slips into mild recession in second quarter

[webfact]

Thailand unexpectedly slips into mild recession in second quarter
By Kitiphong Thaichareon and Orathai Sriring
BANGKOK

(Reuters) - Thailand's economy contracted unexpectedly in the second quarter, slipping into a mild recession, amid weakness in exports, domestic consumption and investment.

Southeast Asia's second-largest economy shrank 0.3 percent in the second quarter from the preceding three-month period, after contracting by a revised 1.7 percent in January-March, data showed on Monday.

The median forecast in a Reuters poll was for growth of 0.2 percent growth. A recession is typically defined as two consecutive quarters of contraction in gross domestic product (GDP).

On an annual basis, economic growth in April-June slowed to 2.8 percent, versus 3.3 percent in the poll, and compared with a revised 5.4 percent in January-March.

Also on Monday, the National Economic and Social Development Board (NESDB) cut its forecast for full-year economic expansion to 3.8-4.3 percent from 4.2-5.2 percent seen in May. A Reuters poll projected 4.0 percent growth.

But economists see some improvement in export and domestic demand in the second half of the year.

Full story: http://www.reuters.com/article/2013/08/19/us-thailand-economy-gdp-idUSBRE97I01R20130819

-- REUTERS 2013-08-19

[draftvader]

Unexpectedly? They could have asked me (or many other ThaiVisa posters). A population that believes what their government tells them even though there are blatant censorship rules in place. Somebody needs to tell the big people that it won't last.....these people are waking up.

[wordchild]

this is a misleading article and headline. The piece refers to growth slowing from the rate of the previous quarter. This is not the same as a recession which would be defined as negative GDP (for two consecutive quarters) compared to the same period the previous year; ie the economy contracting vs last year. The Thai economy still grew in the second quarter (at 2.8%), it just didn't grow by as much as had been expected or, by as much as it grew in the first quarter. BTW many western economies would be overjoyed with this kind of growth. FWIW I wouldn't be surprised if the Thai economy continued to disappoint expectations with slower growth, through this year, but to use the term recession, at this stage, is very misleading.

Edited August 19, 2013 by wordchild

[Totster]

^^ there's always one...

totster

[aTomsLife]

wordchild is correct. The (Thai) authors of the article have defined slower growth as a recession. Their definition of recession is incorrect.

[Thait Spot]

wordchild is correct. The (Thai) authors of the article have defined slower growth as a recession. Their definition of recession is incorrect.

Reuters said "Thailand's economy shrank"

"The 0.3 percent contraction in Southeast Asia's second-largest economy"

Is this not clear enough?

[dcutman]

this is a misleading article and headline. The piece refers to growth slowing from the rate of the previous quarter. This is not the same as a recession which would be defined as negative GDP (for two consecutive quarters) compared to the same period the previous year; ie the economy contracting vs last year. The Thai economy still grew in the second quarter (at 2.8%), it just didn't grow by as much as had been expected or, by as much as it grew in the first quarter. BTW many western economies would be overjoyed with this kind of growth. FWIW I wouldn't be surprised if the Thai economy continued to disappoint expectations with slower growth, through this year, but to use the term recession, at this stage, is very misleading.

Not misleading at all.It is what it says it is.

A recession is typically defined as two consecutive quarters of contraction in gross domestic product (GDP).

http://www.reuters.com/article/2013/08/19/thailand-economy-gdp-idUSL4N0GK0MA20130819

[blorg]

The economy has contracted for two consecutive quarters by 1.7% and 0.3% in Q1 and Q2 respectively. It's not just a slowing of growth, it is an actual contraction. This is the definition of a recession.

The 2.8% is how much it is up on 2012. It is still up on last year due to growth in Q3 and Q4 2012.

Edited August 19, 2013 by blorg

[Redhawk]

Haven't we seen some problems on Thai Airways last week? There were the currencies blamed, waiting for the baddie who has to take responsibility for the slowed grow!

[cardholder]

What happened to usual 8% growth forecast ?

[wordchild]

wordchild is correct. The (Thai) authors of the article have defined slower growth as a recession. Their definition of recession is incorrect.

Reuters said "Thailand's economy shrank"

"The 0.3 percent contraction in Southeast Asia's second-largest economy"

Is this not clear enough?

except that the economy did not shrink it just grew less!

[h90]

What happened to usual 8% growth forecast ?

like in Europe. The nice economic grow will come next year (this year -0.2%, but next year 3% or similar)....That next year super growth I hear since 10 years

[webfact]

Thai economy shrinks in April-June

BANGKOK, August 19, 2013 (AFP) - Thailand's economy shrank 0.3 percent in the three months to June, the second quarterly contraction this year, as lacklustre demand hit manufacturing and exports, data showed Monday.

However, the slide from the previous quarter was better than the revised 1.7 percent contraction in the three months to March as the country recovers from devastating floods in late 2011 that swamped major factories.

On a year-on-year basis, gross domestic product (GDP) expanded 2.8 percent in the second quarter of 2013, weaker than 5.4 percent in January-March, the National Economic and Social Development Board (NESDB) said.

Manufacturing output eased 1.0 percent, with manufacturers hit by slowing domestic demand and ongoing global weakness, the NESDB said in a statement, as the US and China struggle to get up to speed.

Exports shrank 1.5 percent in the quarter from a year earlier.

In light of the latest figures that NESDB cuts its forecasts for 2013 GDP growth to 3.8-4.3 percent, from 4.2-5.2 percent projected in May, which was itself a downgrade from 4.5-5.5 percent previously estimated.

Analysts at Capital Economics warned the weak growth in the second quarter was likely to continue, adding: "We think a strong rebound in growth is unlikely. For a start, falling consumer confidence suggests the household sector is struggling."

However, it saw export growth improving, boosted by a gradual recovery in global demand combined with recent weakness in the Thai baht, which makes the country's exporters a more competitive.

In July Thailand's central bank kept its benchmark interest rate unchanged at 2.50 percent to bolster the economy.

The bank said a slowdown in China was hurting the international outlook, while domestic private consumption had weakened in the face of rising debt worries and the waning effect of measures to stimulate consumer spending.

-- (c) Copyright AFP 2013-08-19

[Totster]

Wait for it..... Someone will say that article is wrong in some way....

totster

[h90]

The USA has been in a depression for the past 4 years and they just keep fudging the numbers and pulling statistics out of their asses.

They are screwing up the entire world economy, not to mention the monetary system with all the "out of thin air" petrodollar/federal reserve notes.

Things are starting to come unglued all over the place.

Europe is not doing much better. And there is a lot inflation in Europe. Officially not, because the calculation package is full with smartphones, RAMs and other computer things to keep the statistics down.

In Europe we believe that we just need to cut each others hair (service industry) and from the profit we can buy all the real products from China.

I guess it won't work in the long range...

[gl555]

I blame the excellent brains they have at the PTP. Best government in the world!

[AnotherOneAmerican]

Pushed the Bth down to 49 to the UKP, and 31.36 to the USD.

[kimamey]

wordchild is correct. The (Thai) authors of the article have defined slower growth as a recession. Their definition of recession is incorrect.

Reuters said "Thailand's economy shrank"

"The 0.3 percent contraction in Southeast Asia's second-largest economy"

Is this not clear enough?

except that the economy did not shrink it just grew less!

I think part of the problem is there is no worldwide definition of a recession. There are also different types of recession but

this would seem to fit the normal terms of a mild recession as GDP has fallen for two consecutive quarters.

I must admit I'm confused by the figures but as far as I can tell the figures are better for the last quarter than the previous one so at least it's going in the right direction. What's missing is any detail about the reasons for the fall in GDP. There may be one off occurrences that are the cause The ending of the first time car buyers scheme would certainly cause a fall in domestic vehicle purchase.

It will be interesting to see what happens in the coming months.

[Thai at Heart]

Ooooooh poop.

That is not good

[RAZZELL]

http://www.bbc.co.uk/news/business-23750951

RAZZ

[ThaiBob]

http://www.bbc.co.uk/news/business-23750951

RAZZ

This is funny, the BBC can't even apply it's own definition of a recession to their own reporting:

http://news.bbc.co.uk/2/hi/business/7495340.stm

[aTomsLife]

wordchild is correct. The (Thai) authors of the article have defined slower growth as a recession. Their definition of recession is incorrect.

Reuters said "Thailand's economy shrank"

"The 0.3 percent contraction in Southeast Asia's second-largest economy"

Is this not clear enough?

Per investopedia: "The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP)" http://www.investopedia.com/terms/r/recession.asp

Thailand still experienced growth, just not as much as forecast. Is that clear enough for you?

[i claudius]

So will the baht ,go down ,thats what we all want to know?

[aTomsLife]

If a country's GDP has been steadily growing 10% a year and is now at $1000 dollars, and it is forecast to grow another 10% -- or $100, to $1100 -- but instead it grows 9% to $1090 -- that is not a recession! That is just a contraction in growth. Not a contraction in GDP. GDP has still increased.

On the other hand, if the same country's GDP shrinks two quarters in a row from $1000 to $995, then to $993 -- then that is a recession.

Edited August 19, 2013 by aTomsLife

[Gulfsailor]

wordchild is correct. The (Thai) authors of the article have defined slower growth as a recession. Their definition of recession is incorrect.

Reuters said "Thailand's economy shrank"

"The 0.3 percent contraction in Southeast Asia's second-largest economy"

Is this not clear enough?

Per investopedia: "The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP)" http://www.investopedia.com/terms/r/recession.asp

Thailand still experienced growth, just not as much as forecast. Is that clear enough for you?

The article is confusing. It says the following; in the first and second quarters Thai GDP was less than GDP in the quarters before. So Thai GDP is shrinking. However, one shouldn't compare quarterly results against previous quarter, as some economies (certainly Thai one) generally fluctuate during the year. So one should compare quarter GDP with the same quarter a year earlier.

Europe's general accepted definition of recession is; "Two consecutive quarters of negative GDP growth compared with SAME quarter previous year". Considering this Thailand is not in a recession, as quarterly results are higher than same quarters last year.

[aTomsLife]

wordchild is correct. The (Thai) authors of the article have defined slower growth as a recession. Their definition of recession is incorrect.

Reuters said "Thailand's economy shrank"

"The 0.3 percent contraction in Southeast Asia's second-largest economy"

Is this not clear enough?

Per investopedia: "The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP)" http://www.investopedia.com/terms/r/recession.asp

Thailand still experienced growth, just not as much as forecast. Is that clear enough for you?

The article is confusing. It says the following; in the first and second quarters Thai GDP was less than GDP in the quarters before. So Thai GDP is shrinking. However, one shouldn't compare quarterly results against previous quarter, as some economies (certainly Thai one) generally fluctuate during the year. So one should compare quarter GDP with the same quarter a year earlier.

Europe's general accepted definition of recession is; "Two consecutive quarters of negative GDP growth compared with SAME quarter previous year". Considering this Thailand is not in a recession, as quarterly results are higher than same quarters last year.

But GDP is not "shrinking"; it's still growing, just at a smaller rate.

I was unaware of Europe's accepted definition. I've always understood that growth is growth. Thus, negative quarters are not defined by slower growth, but an actual contraction in GDP. If you prefer the European definition, I'm not inclined to argue. Either way, as you said, even using Europe's definition, Thailand is not yet in recession.

Reuters should print a retraction. And the Thai authors should hire a native English speaking editor.

[Thai at Heart]

wordchild is correct. The (Thai) authors of the article have defined slower growth as a recession. Their definition of recession is incorrect.

Reuters said "Thailand's economy shrank"

"The 0.3 percent contraction in Southeast Asia's second-largest economy"

Is this not clear enough?

Per investopedia: "The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP)" http://www.investopedia.com/terms/r/recession.asp

Thailand still experienced growth, just not as much as forecast. Is that clear enough for you?

The article is confusing. It says the following; in the first and second quarters Thai GDP was less than GDP in the quarters before. So Thai GDP is shrinking. However, one shouldn't compare quarterly results against previous quarter, as some economies (certainly Thai one) generally fluctuate during the year. So one should compare quarter GDP with the same quarter a year earlier.

Europe's general accepted definition of recession is; "Two consecutive quarters of negative GDP growth compared with SAME quarter previous year". Considering this Thailand is not in a recession, as quarterly results are higher than same quarters last year.

Well, by definition, if the GDP 2 quarters, was smaller than that 3 quarters ago, and the one that was one quarter ago is smaller than that in quarter 2, then

Quarter 3 is smaller than Quarter 2 which is smaller than Quarter 1.

[happysanook]

Wait for it..... Someone will say that article is wrong in some way....

totster

You'd have to be a complete moron to not question and take every article for 100% truth.

[wordchild]

wordchild is correct. The (Thai) authors of the article have defined slower growth as a recession. Their definition of recession is incorrect.

Reuters said "Thailand's economy shrank"

"The 0.3 percent contraction in Southeast Asia's second-largest economy"

Is this not clear enough?

Per investopedia: "The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP)" http://www.investopedia.com/terms/r/recession.asp

Thailand still experienced growth, just not as much as forecast. Is that clear enough for you?

The article is confusing. It says the following; in the first and second quarters Thai GDP was less than GDP in the quarters before. So Thai GDP is shrinking. However, one shouldn't compare quarterly results against previous quarter, as some economies (certainly Thai one) generally fluctuate during the year. So one should compare quarter GDP with the same quarter a year earlier.

Europe's general accepted definition of recession is; "Two consecutive quarters of negative GDP growth compared with SAME quarter previous year". Considering this Thailand is not in a recession, as quarterly results are higher than same quarters last year.

But GDP is not "shrinking"; it's still growing, just at a smaller rate.

I was unaware of Europe's accepted definition. I've always understood that growth is growth. Thus, negative quarters are not defined by slower growth, but an actual contraction in GDP. If you prefer the European definition, I'm not inclined to argue. Either way, as you said, even using Europe's definition, Thailand is not yet in recession.

Reuters should print a retraction. And the Thai authors should hire a native English speaking editor.

Well, according to the numbers given, Thai GDP did shrink the first and second quarter. Not just slowing growth. But both quarters were up compared to both quarters last year.

As an example;

Q1 2012: 100

Q2 2012: 101

Q3 2012: 103

Q4 2012: 105

Q1 2013: 104

Q2 2013: 103

Quarter on quarter contraction, year on year growth.

its the year on year comparison that counts. I have noticed in the past that Reuters (surprisingly) has printed some nonsense stories on the Thai economy maybe from the same journalists.

[wordchild]

wordchild is correct. The (Thai) authors of the article have defined slower growth as a recession. Their definition of recession is incorrect.

Reuters said "Thailand's economy shrank"

"The 0.3 percent contraction in Southeast Asia's second-largest economy"

Is this not clear enough?

Per investopedia: "The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP)" http://www.investopedia.com/terms/r/recession.asp

Thailand still experienced growth, just not as much as forecast. Is that clear enough for you?

The article is confusing. It says the following; in the first and second quarters Thai GDP was less than GDP in the quarters before. So Thai GDP is shrinking. However, one shouldn't compare quarterly results against previous quarter, as some economies (certainly Thai one) generally fluctuate during the year. So one should compare quarter GDP with the same quarter a year earlier.

Europe's general accepted definition of recession is; "Two consecutive quarters of negative GDP growth compared with SAME quarter previous year". Considering this Thailand is not in a recession, as quarterly results are higher than same quarters last year.

exactly!