Latest news with #householdconsumption
Reuters
4 days ago
- Business
- Reuters
Thailand economy likely lost steam in second quarter on weak domestic demand: Reuters poll
BENGALURU, Aug 15 (Reuters) - Thailand's economic growth likely slowed in the second quarter as weak household consumption offset gains from strong exports, according to a Reuters poll of economists. Southeast Asia's second-largest economy was estimated to have expanded 2.5% year-on-year in the April-June quarter, the August 12-15 survey of 21 economists showed. Estimates ranged between 1.6% and 2.9%. The economy grew 3.1% in the first three months of 2025, and the government is scheduled to release the second-quarter data on August 18. On a quarter-on-quarter, seasonally adjusted basis, gross domestic product (GDP) likely expanded 0.3%, a smaller poll sample showed, slowing from 0.7% in the first quarter. ANZ economist Krystal Tan said high-frequency data showed a recovery in private investment but it was probably offset by a deterioration in private consumption, while strong import growth kept contribution from net exports to overall growth modest. "We expect growth to weaken materially in the coming quarters as the impact of higher U.S. tariffs filters through. The tourism sector is struggling and is unlikely to provide offsetting support," she said. Exports, a key growth driver, recorded double-digit gains for all months except April in the first half of the year, as companies rushed shipments before higher U.S. tariffs came into effect. The United States was Thailand's biggest export market last year, accounting for 18.3% of total shipments, with a value of $55 billion. Poon Panichpibool, a markets strategist at Krung Thai Bank, said domestic demand was weak, with high household debt and slowing foreign tourist arrivals weighing on consumption. Private consumption contracted in April, opens new tab and June, opens new tab on a month-on-month basis and ticked up slightly in May, opens new tab, Bank of Thailand (BOT) data showed. To prop up domestic demand, the central bank cut its key policy rate by 25 basis points to a three-year low of 1.50% on Wednesday. It was the fourth reduction in 10 months. BOT Assistant Governor Sakkapop Panyanukul said growth would moderate in the second half and stressed there was little risk of a technical recession, which is defined as two consecutive quarters of contraction. "We expect GDP growth to slow to 1.7% in the second half of 2025. Headwinds are piling up. Exports will slow as frontloading fades," said Erica Tay, director of macro research at Maybank. A separate Reuters poll in July forecast growth of 1.3% and 0.9% in Q3 and Q4, respectively.
Yahoo
07-07-2025
- Business
- Yahoo
Calls grow for China's household sector to be bigger economic driver
By Kevin Yao BEIJING (Reuters) -Chinese government advisers are stepping up calls to make the household sector's contribution to broader economic growth a top priority at Beijing's upcoming five-year policy plan, as trade tensions and deflation threaten the outlook. Leaders are gathering proposals for their 15th five-year plan, a voluminous document that lays out priorities up to 2030. The plan is expected to be endorsed at a December Communist Party conference and approved by parliament in March. Policy advisers told Reuters while they expect the document will elevate household consumption to a top goal in principle, it is likely to stop short of laying out an explicit target. Household consumption currently accounts for 40% of gross domestic product - some advisers propose China should aim for 50% over the next two five-year cycles. Economists have long urged Beijing to switch to a consumption-led economic model and rely less on debt-fuelled investment and exports for growth. While China has so far largely withstood pressures from higher U.S. tariffs, fresh worries about industrial overcapacity, factory deflation and the resulting stress on jobs and incomes have heightened calls for a shift in long-term strategy. "Relying on external demand makes us vulnerable to global shocks," a policy adviser said on condition of anonymity due to the topic's sensitivity. "We should strengthen domestic consumption as a key driver of growth and economic transformation," said the source, echoing calls from two other advisers Reuters spoke with. A fourth adviser said his proposals would not include this recommendation as "this is not something that can be easily achieved without the correct policies and reforms." NEW URGENCY Calls for a more robust consumer sector are not new. While Beijing has pledged structural changes for more than a decade, its household consumption share of GDP is roughly where it was in 2005 and far below the OECD average of 54%. The difficulty, analysts say, is that China has to shift resources from the business and government sectors to households in ways that could slow growth. Japan entered its decades-long stagnation period with a household share of GDP of 50% in 1991. That only grew to 58% by 2013, before dipping back to 55%. A 14th five-year plan progress report from 2023 lamented "insufficient mechanisms" to boost consumption. The policy proposals for the 15th plan are largely the same ones Beijing had promised before, the advisers said. These include bolstering welfare, relaxing an internal passport system blamed for deep urban-rural inequality, and other measures - including tax changes - to redistribute income towards those who have less and are more likely to spend it. New proposals include using state-owned assets to shore up pension funds and propping up the wobbly stock market and the crisis-hit property sector to increase households' investment earnings. "We have to increase household incomes, we have to boost transfers to low-income groups, but we've seen wage cuts," said a second adviser. He added household demand has taken on increased importance at the upcoming five-year plan with discussions focusing on whether China should set a specific consumption target. Yang Weimin, vice-chairman of the China Centre for International Economic Exchanges think-tank, said last month China should raise household consumption to over 50% of GDP by 2035. BALANCING ACT The advisers expect a goal from the 14th plan to keep the manufacturing share of GDP relatively stable will survive another five years. State-guided investment has turned manufacturing into a key growth engine. But an argument is emerging that investing more in an industrial complex that already accounts for a third of global manufacturing brings diminishing returns. A prominent Communist Party magazine last week called for a crackdown on price wars in various industries, in a nod to China's overcapacity and deflation. Peng Sen, chairman of the China Society of Economic Reform, said in comments posted on the WeChat account of the Changan Avenue Reading Club, an informal body backed by senior officials, that sluggish consumption also hurts manufacturing profits and endangers jobs. Peng said in March that China should boost final consumption, which includes household and government spending, as a share of GDP to 70% by 2035. The share stood at 56.6% in 2024. But not all of China's policy thinkers favour consumer-led growth. In a June article in financial outlet Yicai, government economist Yu Yongding said the concept was "theoretically incorrect" and incompatible with long-term development. "Without investment, there is no growth and without growth, sustained consumption is difficult to achieve," Yu wrote. As with the previous five-year plan, China is unlikely to set a specific GDP growth target for the next cycle, the advisers said. China targets growth of around 5% this year, the same goal as in 2024. But ambitions laid out in 2021 to double the size of the economy by 2035 remain, the advisers said. This, as in the past, might mean delaying painful reforms needed to rebalance the economy towards consumption, analysts say. "Growth during this period cannot be lower than 4%," said a third adviser. "We won't accept anything less." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
18-06-2025
- Business
- Bloomberg
Euro Zone Is Still Held Back by Rising Mortgage Rates, ECB Finds
Household consumption in the euro area will remain restrained for some time as past interest-rate hikes continue to feed through to mortgages, according to research by the European Central Bank. The impact will be felt even after the ECB lowered its deposit rate to 2% from 4% starting in June 2024, economists at the Frankfurt-based institution wrote in a paper published Wednesday. That's because fixed-rate loans taken out when inflation was low are still expiring. Borrowing costs for those that are refinanced will jump to current levels.
Reuters
30-05-2025
- Business
- Reuters
Czech growth helped by investment, exports, tariffs cloud outlook, central bank says
PRAGUE, May 30 (Reuters) - Czech Republic's 2.2% year-on-year economic expansion in the first quarter was above the central bank's forecast of 2.1% mainly thanks to more resilient investments and exports, but the uncertainty over the impact of U.S. tariffs cloud the outlook, the central bank said on Friday. The bank said increase in household consumption -- which is the overall growth driver -- was lower at 2.5% than its forecast of 3.3%. Investment dropped year-on-year but less than expected and grew in quarterly terms, while exports were also more resilient than expected, the bank said. "For both investment and exports, however, the question is how much the positive developments were due to one-off stockpiling by firms ahead of an expected rise in trade barriers," the bank said. It said that while investments and exports would be the first to be hit by large tariff barriers, continued strong household spending should put full-year 2025 growth at around 2%.
