UPDATE1: Thai Q3 GDP slows to 3.3% from Q2’s 4.6% on weaker farming, exports

20, Nov. 2018

――Adds details, official comments in paragraphs 4-16

BANGKOK, NNA - Thailand’s economic growth came in much weaker than expected in the July-September quarter, slowing to 3.3 percent on year due to lower agriculture output and a slump in exports, an indication that the U.S.-China trade dispute is having some effects in Asia.

The growth in the real gross domestic product in the third quarter decelerated sharply from 4.6 percent the previous quarter. Weaker exports partly offset stronger domestic demand, preliminary data from the Office of the National Economic and Social Development Board showed Monday.

The median forecast of 12 economists polled by Reuters was 4.2 percent growth for July-September.

Looking at quarter-on-quarter figures, the seasonally adjusted GDP posted zero growth at an annualized pace in July-September, slowing from a modest 0.9 percent expansion in April-June.

The GDP growth rate in the first nine months of 2018 stood at 4.3 percent on year, largely in line with the official full-year forecast of 4.2 percent.

Output in the agricultural sector, including fishery, slowed down sharply to 4.3 percent on year from 10.2 percent in the April-June quarter, dragged down by lower yields in rice, maize and rubber.

Growth in the non-agricultural sector also decelerated to 3.3 percent from 4.1 percent in the previous quarter in light of slower factory production and tourism.

In the third quarter, the number of foreign tourists rose 1.9 percent on year to 9.06 million, with the pace of increase slowing sharply from 8.4 percent in April-June and 15.5 percent in January-March.

The number of tourists from China fell 8.8 percent, compared to a rise of 21.3 percent the previous quarter, in light of a Phuket boat accident in July. The month-long FIFA World Cup in Russia through mid-July also led to a decline in tourists from Europe.

Exports of goods and services dipped for the first time since the final quarter of 2015, falling 0.1 percent from a year earlier after rising 6.8 percent the previous quarter.

The U.S. trade row caused a decrease in integrated circuit exports to China while higher U.S. tariffs dented demand for washing machines and solar panels shipped from Thailand, according to the government.

The worsening U.S.-China trade war is having a negative impact on Thai exports “in the short term,” Thosaporn Sirisumphand, secretary general of the Office of the National Economic and Social Development Board, told reporters.

But in the longer term, he said, the drag from the dispute could benefit Thailand’s economic growth because companies that produce goods affected by higher U.S. import duties tend to have factories both in China and Thailand,

More U.S. and Chinese firms are considering moving some production capacity to Southeast Asia, he added.

In July-September, private consumption grew 5.0 percent on year, firmer than the 4.5 percent rise in April-June. Low inflation, high consumer confidence and rising personal loans supported spending on durable goods.

Business investment in equipment was also solid, up 3.9 percent, slightly outpacing the 3.7 percent increase the previous three months, backed by investment in construction and machinery.