The Thai government’s PR department released a sanguine report on Thailand’s Q2 GDP data yesterday, glossing over the economic impact of the violent protests that flared up in April and May:
Thailand’s gross domestic product (GDP) in the second quarter of this year has expanded by 9.1%, setting the highest record of half-year figure in 13 years, according to the National Economic and Social Development Board (NESDB).
Source: “Half-year GDP hits 13-yrs highest“, National News Bureau of Thailand
A look at the data reveals however that real GDP actually contracted in Q2 2010 by 5.6%, not seasonally adjusted. The 9.1% growth reported by the National News Bureau refers to year-over-year growth. By this metric, Thailand’s expansion is really nothing surprising considering GDP rose from a very low base formed after the deepest contraction since the 1997-98 financial crisis. When the bar is set low, it’s quite easy to jump the bar. What’s more striking is, Thailand failed to even meet that bar in some respects:
The government’s press release failed to note that net exports, or exports net of imports, actually decreased on a quarter-over-quarter basis at a double-digit pace: -14.5% at 1988 prices, -24.2% at current market prices. The export figures are not seasonally adjusted, however. Unfortunately, the national statistical agency, NESDB, does not break down the seasonally adjusted expenditure GDP into all its subcomponents, obscuring how private investment, exports and inventories fared on a seasonally adjusted basis.
Looking at the NESDB’s write-up on Q2 2010 GDP does not yield helpful insights either. The report shows tables of data without specifying their properties – quarter-over-quarter? Year-over-year? Quarter-over-quarter annualized? Seasonally adjusted? Etc. One would only know by looking at the data, which suffers shortcomings which I’ve noted earlier.
Government press releases pick and choose the most politically favorable data to report. Officials expect few people would actually look past them and dive into the data. If you can stomach the numbers, however, the data will reveal a little more of the economic impact of political turmoil:
- Growth of real private consumption expenditure in the domestic market slowed from 0.7% q/q in Q1 to 0.0% q/q in Q2, seasonally adjusted.
- Tourist expenditure dropped 23.9% y/y in Q2, seasonally adjusted.
- Gross fixed capital formation in the service sector contracted 17.6% q/q in Q2, seasonally adjusted.
- The Hotels and Restaurants sector suffered the most from the violence, contracting 11% q/q in Q2, seasonally adjusted.
- Retail, education, health and social services were disrupted, leading to declines in those sectors on a q/q basis.
Overall, the impact was not as bad as we feared but neither was it as minor as the government portrays. Inventories fell in Q2 due to the end of the harvest season and a cyclical slowdown in manufacturing. Agricultural output declined as a drought menaced farmers and shrank real exports.
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