Thailand’s healthy headline GDP masks pockets of weakness: Credit Suisse

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After visiting Khon Kaen city in Thailand’s northeastern rice country, Credit Suisse said the region showed the country’s healthy headline gross domestic product (GDP) figures were massing “big pockets” of weakness.

It noted there were positive signs for the region, which has been untouched by the tourism boom. With higher rice prices and healthy rainfall, local farm incomes were bucking the negative national trend and rising, while regional vehicle sales were improving, the bank said in a note on Tuesday.

But it added that negative indicators abounded.

“Farmers told us that their debts continue to rise, and business people reported that they lack the confidence to invest,” Credit Suisse said. “Restaurants and retail outlets are struggling. Increased competition seems to be hurting SMEs. The property sector remains weak.”

The bank said the regional visit highlighted Thailand’s dependence on external demand.

“Khon Kaen is not Thailand in microcosm. It is poorer and more rural than the country as a whole,” the bank said. “The national economy clearly is faring better. But the continued struggles of the northeast remind us that, without booming external demand, Thailand’s recovery could falter.”