(Bloomberg) — Thailand’s economy improved in the third quarter after the government eased restrictions on movement and implemented a series of stimulus measures while getting the country’s Covid-19 outbreak largely under control.
Gross domestic product shrank 6.4% from a year ago, the National Economic and Social Development Council said Monday, recovering from the prior quarter’s revised 12.1% contraction at the peak of the outbreak. The figure was better than the median estimate of 8.8% contraction in a Bloomberg survey of 19 economists. The council also raised its full-year forecast to a 6% contraction, from an earlier estimate of a 7.3% to 7.8% drop.
With tourism and trade hit hard by the outbreak, Prime Minister Prayuth Chan-Ocha has spent hundreds of billions of baht in cash handouts and stimulus measures from a 1.9 trillion-baht ($62.9 billion) economic package to support local demand. Meanwhile, a strengthening currency and political protests pose risks to the fragile recovery.
All the economic indicators, barring tourism, improved in the third quarter and government spending will remain the main growth driver for next year, Danucha Pichayanan, the council’s secretary general, told a news briefing. A strengthening baht and high level of unemployment remain risks for growth next year, he said.
- The council’s full-year forecast of a 6% contraction compares with a 7.7% fall seen by the country’s finance ministry and the 7.8% decline the central bank expects. It also forecast a growth of 3.5% to 4.5% in 2021
- GDP rose a seasonally adjusted 6.5% in the third quarter compared with the previous three months, the council said Monday, better than the median estimate of a 3.9% gain in a Bloomberg survey of economists. Second-quarter GDP estimate was revised to -9.9% from 9.7% earlier
- The government wants the central bank to temper a rally in the nation’s currency, which is threatening its efforts to boost exports as an offset to the slump in tourism revenue. The baht has surged in the past month as foreign inflows resumed into Thai stocks and bonds
- Bank of Thailand Governor Sethaput Suthiwart-Narueput said last week that the country’s high foreign reserves and low foreign debt will help it weather the crisis, which will take time and targeted remedies to resolve. Around 3 million workers have been affected by the pandemic, with 700,000-800,000 people rendered jobless
- Challenges to economic recovery in 2021 include rising unemployment, as well as a drought, Covid-19 outbreak, global financial and economic situation, including U.S. governance under the new president, Danucha said
- Measures to accelerate economic rebound should focus on managing Covid-19 infection risks, helping tourism sector, disbursing public spending, promoting private investment, preparing for a drought, and de-escalating the protest movement: Danucha
(Updates with comments on outlook in fourth paragraph.)
©2020 Bloomberg L.P.
U.S., Mexico, Canada to hold ‘robust’ talks on trade deal
The United States, Mexico and Canada will next week hold their first formal talks on their continental trade deal, with particular focus on labor and environmental obligations, the U.S. government said on Friday.
“The ministers will receive updates about work already underway to advance cooperation … and will hold robust discussions about USMCA’s landmark labor and environmental obligations,” the office of U.S. Trade Representative Katherine Tai said in a statement.
The United States is also reviewing tariffs which may be leading to inflation in the country, economic adviser Cecilia Rouse told reporters at the White House on Friday, a move that could affect hundreds of billions of dollars in trade.
The United States, testing provisions in the new deal aimed at strengthening Mexican unions, this week asked Mexico to investigate alleged abuses at a General Motors Co factory.
(Reporting by David Ljunggren; Editing by Hugh Lawson and Jonathan Oatis)
The Toronto Stock Exchange rises 0.15% to 19,135.81
* The Toronto Stock Exchange’s TSX rises 0.15 percent to 19,135.81
* Leading the index were Canadian Tire Corporation Ltd <CTCa.TO>, up 10.6%, WSP Global Inc, up 9.2%, and Sunopta Inc, higher by 7.5%.
* Lagging shares were Turquoise Hill Resources Ltd, down 18.5%, AcuityAds Holdings Inc, down 17.0%, and Pan American Silver Corp, lower by 10.3%.
* On the TSX 125 issues rose and 97 fell as a 1.3-to-1 ratio favored advancers. There were 12 new highs and 2 new lows, with total volume of 239.1 million shares.
* The most heavily traded shares by volume were Enbridge Inc, Manulife Financial Corp and Suncor Energy Inc.
* The TSX’s energy group fell 2.80 points, or 2.2%, while the financials sector climbed 4.42 points, or 1.3%.
* West Texas Intermediate crude futures fell 3.47%, or $2.29, to $63.79 a barrel. Brent crude fell 3.32%, or $2.3, to $67.02 [O/R]
* The TSX is up 9.8% for the year.
This summary was machine generated May 13 at 21:03 GMT.
Rising Canadian Dollar could hit export outlook, affect monetary policy
If the buoyant Canadian dollar continues to rise it could create headwinds for exports and business investment as well as affecting monetary policy, Bank of Canada Governor Tiff Macklem said on Thursday.
The currency has jumped about 4% since the central bank updated its projections in April, driven by surging commodity prices. Canada is a major exporter of energy, lumber, minerals and agricultural products. It hit a six-year high on Wednesday.
“We’ve highlighted that a stronger dollar does create some risk,” Macklem told reporters after a speech to university students in his most detailed comments yet about the potential drawbacks of a more muscular currency.
“If it moves a lot further, that could have a material impact on our outlook and it is something we have to take into account in our setting of monetary policy.”
Further gains could drag down export projections. “If we’re less competitive, our export profile is weaker, that also probably means that our investment profile will be weaker,” he said.
The Canadian dollar was trading 0.4% lower at 1.2180 to the greenback, or 82.10 U.S. cents, pressured by a sharp decline in oil prices.
Macklem earlier said that some of the monetary policy tools the bank is using to address the COVID-19 pandemic, such as quantitative easing (QE), could widen wealth inequality and that it was looking closely at the issue.
While the QE program has stimulated demand and helped create jobs, it was is boosting wealth by inflating the value of assets that “aren’t distributed evenly across society”, he said.
The bank had been buying C$4 billion ($3.3 billion) of government bonds a week but last month cut that to C$3 billion, becoming the first major central bank to trim a pandemic-era money-printing stimulus program.
It also signaled it could start lifting interest rates in late 2022, as it hiked the outlook for the Canadian economy.
Macklem reiterated Thursday that the benchmark rate would stay at its current record low 0.25% until inflation was sustainably at the 2% target. The bank, he added, would continue to use monetary policy tools to support a “complete recovery.”
(Additional reporting by Fergal Smith in Toronto; Editing by Steve Orlofsky and John Stonestreet)
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