Modest 2Q GDP Recovery, Covid Wave Remains A Risk

Growth Accelerates in 2Q Despite Fourth Covid Outbreak, Helped By Pandemic Low Base Effects

GDP expanded by a faster +6.6% in 2Q21, up from the revised +4.7% in 1Q21, despite the recent more severe fourth Covid wave. This is ahead of ours (+6%) but below market expectations (+7.2%). The improvement in GDP growth partly reflects the low base as GDP was almost flat (+0.4%) in 2Q 2020 amid the pandemic lockdown.

Growth was largely driven by industry & construction (+10.3% vs. +6.3% in 1Q) which strengthened to the fastest pace since 3Q 2015. Services (+4.3% vs. +3.6% in 1Q) extended its recovery, but was weaker-than-expected amid the recent Covid outbreak. Agriculture, forestry & fishery (+4.1% vs. +3.5% in 1Q) quickened its growth in 2Q, on the back of higher commodity prices, and better rice and livestock production.