Search

 

Cablegate: Thai Economy Improves in Second Quarter (for Most)

VZCZCXRO1347
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #2150 2381108
ZNR UUUUU ZZH
P 261108Z AUG 09
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC PRIORITY 8071
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
INFO RUEHCHI/AMCONSUL CHIANG MAI PRIORITY 6911
RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY

UNCLAS BANGKOK 002150

STATE FOR EAP/MLS AND EB
STATE PASS TO USTR
TREASURY FOR OASIA
SINGAPORE FOR FINATT BLEIWEIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EFIN ECON EINV ELAB TH
SUBJECT: Thai Economy Improves in Second Quarter (For Most)

REF: Bangkok 2032

Sensitive But Unclassified. For Official Use Only.

1. (SBU) Summary and Comment: Second quarter economic data released
August 24 by the Thai Government showed an improved economic
situation in Thailand. Gross domestic (GDP) was down 4.9 percent
when compared to the same period in 2008, but improved 2.3 percent
over the first quarter of this year. Many financial analysts
believe the data shows the Thai economy has reached the bottom and
is on the road to a "V-shaped" recovery from the global economic
crisis. According to some private sector observers however, the
benefits of recovery are being felt primarily by large business
owners. Laborers and small and medium enterprises, pressured by
cost cutting measures, stiff competition, and a lack of access to
capital, are still being squeezed and will enjoy the benefits later
and to a lesser extent. End Summary and Comment.

2. (U) On August 24th, the Thai government's National Economic and
Social Development Board (NESDB) released its official report on
Thailand's second quarter economic performance. While GDP
contracted 4.9 percent (year on year (yoy)) when compared to the
second quarter of 2008, seasonally adjusted real GDP expanded by 2.3
percent over the first quarter of 2009. The NESDB anticipates
positive quarterly growth to return in the fourth quarter of this
year, and the total 2009 GDP forecast to come in between a 3 and 3.5
percent contraction.

3. (U) The manufacturing sector contracted by 8.4 percent (yoy), an
improvement over the first quarter contraction of 14.4 percent
(yoy). The construction sector moved into the positive zone for the
first time since early 2008 with an expansion of 2.5 percent (yoy).
The financial sector also showed improvement, growing by 5.6 percent
(yoy). The agricultural sector, which had shown positive growth in
the first quarter of 2009 (3.4 percent yoy) reversed to negative
growth of 2.7 percent (yoy) due to a decrease in prices and yields
of several important agricultural products (e.g., rice, maize, and
cassava).

4. (U) Numerous private analysts, the reports of whom we have seen
or have been cited in the press, concur with Thai government claims
that government consumption (through fiscal stimulus) and investment
had much to do with the positive second quarter performance.
Government spending was up 5.9 percent in the second quarter.
Public investment increased dramatically from -9.1 percent in the
first quarter of 2009 (yoy) to 9.6 percent in the second quarter
(yoy) (NOTE: One private analyst told us that much of the Thai
government's investment resulted from the purchase of aircraft by
the national air carrier, Thai Airways. End Note.) Private
consumption and investment improved only slightly. Consumption
registered negative 2.3 percent (yoy) compared to negative 2.5
percent (yoy) in the first quarter. Investment was at negative 16.1
percent (yoy) compared to negative 17.7 percent (yoy) in the first
quarter.

5. (U) With regards to foreign investment, Thailand's benchmark
stock index is up roughly 45 percent from the beginning of 2009
compared to an approximately 48 percent fall over the course of last
year. However, while the Thai stock market is up, it has not
performed as well this year as other exchanges in the region, namely
those in Indonesia, the Philippines, Vietnam, and Singapore.
According to the NESDB, Foreign Direct Investment (FDI) inflow
during the second quarter stood at USD 2.037 billion, just slightly
more than the USD 1.993 billion total inflow during the first
quarter.

6. (SBU) The Managing Director of a private securities firm
tempered the generally positive reaction to the second quarter's
improved economic performance. He noted that companies ran down
their inventories in the first quarter which, once exhausted,
required replenishing. He also noted that small and medium
enterprises (SMEs) continue to face difficulty receiving loans from
banks, unlike large businesses. As such, much of the stock market's
increase is due to large businesses soaking up market share left by
SMEs. He also suggested, as we have heard elsewhere (reftel), that
laborers are generally not yet experiencing improvement in this
"crisis of the working poor," since a return to profitability for
many companies has been achieved through cost cutting (fewer
laborers, fewer hours, etc.).

© Scoop Media

 
 
 
World Headlines

 


UN: Bachelet Alarmed By Number Of Palestinian Children Killed In Latest Escalation

UN Human Rights Chief Michelle Bachelet today expressed alarm at the high number of Palestinians, including children, killed and injured in the occupied Palestinian territory this year, including in intense hostilities between Israel and Palestinian armed groups in Gaza last weekend... More>>

Save The Children: One Year Under Taliban Rule, Girls Are More Isolated, Hungry, Sad: New Report
One year since the Taliban took control of Afghanistan, an economic crisis, crippling drought and new restrictions have shattered girls’ lives, excluding them from society and leaving them hungry...
More>>

Palestinian Ministry of Health: Developments In The Health Situation During The Israeli Aggression On The Cities & Governorates Of The Gaza Strip
For the second day in a row, the Israeli aggression against the Gaza Strip continues by targeting overcrowded residential areas and neighborhoods, as the death toll rose to 13 citizens, including a 5-year-old girl and a 23-year-old woman... More>>


Somalia: ‘We Cannot Wait For Famine To Be Declared; We Must Act Now’
Rising acute food insecurity in Somalia has caused more than 900,000 people to flee their homes in search of humanitarian assistance since January last year, the Food and Agriculture Organization (FAO) has warned... More>>

UN: American West Faces Water And Power Shortages Due To Climate Crisis
Two of the largest reservoirs in the United States are at dangerously low levels due to the climate crisis and overconsumption of water, which could affect water and electricity supply for millions in six western states and Mexico, the UN Environment Programme (UNEP) warned on Tuesday... More>>



Singapore: UN Experts Call For Immediate Moratorium On Executions For Drug Offences

UN experts* today condemned the execution of Nazeri Bin Lajim, a 64-year-old Malay Singaporean national convicted of drug offenses and urged the Government of Singapore to halt plans to execute individuals on death row for drug related charges... More>>