AFTER A second quarter of consecutive contraction, Thailand’s economy slipped into a technical recession in the third quarter, adding to fears that the world’s main economic engine these days, Asia, may be experiencing a slowdown.
The data reinforces signs of stuttering growth across much of the region, including China and fast expanding South Korea, as well as Taiwan and Indonesia.
The slide in the US dollar has forced many regional currencies higher, causing slowing export growth. Manufacturing growth is easing and there are signs that the supportive effects of government stimulus plans are fading.
All of which makes it difficult for Asian central banks to return interest rates to more rational levels after cutting them sharply after the onset of the global financial crisis in 2008.
However, strong growth in Asian regional demand means the overall picture for the region remains strong, at the kind of levels most economies in the West can only dream of.
Growth forecasts for this year are for a 15 per cent rise in Singapore’s GDP, 9.5 per cent growth in China, 7.5 per cent expansion in Vietnam, 7.9 per cent in Thailand, 6-7 per cent in Malaysia and 6 per cent in Indonesia.
Thailand, the second biggest economy in southeast Asia, shrank by 0.2 per cent in the third quarter after a revised 0.6 per cent contraction in the second three months of the year, data showed. Political unrest in the second quarter was believed to be behind the contraction, rather than specific economic fundamentals. A recession is usually defined as two or more consecutive quarters of negative economic growth.
Earlier data had indicated the economy grew 0.2 per cent in the second quarter from the first, but that was revised downwards, largely due to political unrest during April and May in which more than 90 people were killed.
Despite the slowdown, Thailand’s planning agency tipped growth of 3.5–4.5 per cent in 2011.
Also yesterday, Malaysia’s central bank said growth slowed more than expected to 5.3 per cent in the third quarter from 8.9 per cent in the second.
“Growth will still remain strong due to domestic demand. This is due mainly to exports performance, it [economic growth] will strengthen again in the second half of next year,” central bank chief Zeti Akhtar Aziz said.
Figures last week showed Taiwan’s growth slowing in the third quarter and Indonesia reported this month its first slowdown in annual growth in five quarters.
While weaker overseas demand is cooling the ardour of Asian economies, optimism remains, with Singaporeans the most upbeat consumers in the region, according to the latest Asian Consumer Confidence Index conducted by InsightAsia. The index rose 11 points to 137 in the third quarter, after a dip in the second quarter, Singaporean newspaper the Business Timesreported.
