Thailand exits technical recession

GDP growth of 4.8% has been penciled in.

According to DBS, all eyes will be on Thailand's 3Q GDP data. DBS has penciled in GDP growth at 4.8% (QoQ, saar), which would bring the headline number to 3.5% YoY up from 2.8% in 2Q. The economy is no longer in a technical recession. GDP growth may still end up at 4% YoY for 2013. Markets should cheer the data release.

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Whether markets will is another question though. GDP growth outlook seems to have turned gloomy again in the recent weeks. Consumer confidence has continued to slip and this may prove to be a significant drag.

We would be watching import numbers very closely in the coming months - imports have been falling at an average of 2% MoM sa in the past 3 months. If confidence were to remain low going forward, some moderation in domestic demand is on the cards in 2014.

This does not sound good. The global economy seems to be getting better, if only slightly. Recent data from the region suggests some improvement in manufacturing exports growth and this should prove encouraging for Thai manufacturers too.

Indeed, capacity utilization has ticked up slightly in September. For all that matters though, export growth remains lacklustre even if some upside has been witnessed in recent months.

Additionally, it does not look like the government will speed up its infrastructure projects anytime soon. Against this backdrop, our 5.2% GDP growth projection for 2014 seems like a stretch now.