Many countries around the world are showing signs of economic improvement. First, the German economy, Europe’s largest, which contracted the most in at least four decades in the first quarter after the global financial crisis curbed export demand and investment, is now showing the first signs of stabilization, with manufacturing orders having risen for the first time in seven months in March and business confidence having rebounded from a 26-year low in April.
Gross domestic product dropped a seasonally adjusted 3.8 percent from the fourth quarter, when it fell 2.2 percent. That’s the deepest slump since quarterly data were first compiled in 1970. It also marks an unprecedented fourth successive quarterly contraction.
I believe there are some grounds for optimism that the pace of decline in economic activity will decelerate markedly in the months ahead. However, it is certainly not advisable to be overly optimistic that the recovery process is safely on track. This will most likely be a gradual process.
The first-quarter slump was led by a decline in exports and investment. Consumer and government spending rose slightly in the quarter. In the year, the economy shrank 6.9 percent when adjusted for the number of working days.
European confidence in the economic outlook increased for the first time in 11 months in April and the recession in the region’s manufacturing industry eased for a second month. German exports unexpectedly rose in March and industrial production held steady, ending a six-month slump and adding to signs that the worst may be over. Spain’s economy, Europe’s fourth largest, contracted 1.8 percent in the first three months of the year. The recovery may start sooner than previously envisaged, despite the further strong deterioration of economic activity in the first quarter of this year. I have observed an increasing number of positive signs suggesting that the economy is stabilizing.
In China, the recently released data adds to evidence that a 4 trillion yuan ($586 billion) stimulus plan is buoying domestic growth, while the global recession takes a toll on exports and related industries. Urban fixed-asset investment grew a more-than-expected 30.5 percent in the first four months of this year. Retail sales grew more than the economists’ median estimate of 14.5 percent, after climbing 14.7 percent in March. Output of automobiles, cement, air-conditioners and oil products grew more strongly.
Shanghai’s stock index has climbed 44 percent this year on optimism that the government can engineer an economic revival. New lending is already higher than the government’s targeted minimum of 5 trillion yuan for the year and money supply surged by a record last month. Money-supply growth tends to precede output gains by two quarters, suggesting production will strengthen in coming months.
China’s vehicle sales have topped those in the U.S. this year. General Motors Corp. said its Chinese sales had jumped last month to a record as government subsidies spurred demand.
I think the Thai economy will react positively to the improving world economy, giving better export performance, and the government's stimulus spending will start boosting economic growth in the coming months.
By Chodechai Suwanaporn [email protected]
Source: www.fpo.go.th