Thailand Q1 GDP grows slowest in over 4 years at 2.8 % y/y amid global slowdown

22, May. 2019

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BANGKOK, NNA – Thailand’s economic growth decelerated to the slowest pace in more than four years in the January-March quarter with exports hit by the global slowdown caused by the U.S.-China trade dispute and business investment cautious due to domestic political uncertainty.

GDP slowed to 2.8 percent year-on-year from 3.6 percent (revised down from 3.7 percent) in the last three months of 2018. It was weaker than the 3.0 percent median forecast by economists polled by Reuters and the slowest growth since the fourth quarter of 2014, when GDP was up 2.4 percent.

The Office of the National Economic and Social Development Council released preliminary gross domestic product data for the first quarter on Tuesday.

Key Points:

―― On a seasonally adjusted basis, Thailand’s GDP grew a real 1.0 percent in January-March from the previous quarter, the fastest pace since the 1.1 percent growth in the second quarter of 2018. However, it was below the median forecast of 1.4 percent.

―― Exports, the backbone of the economy, were the main damper, falling 3.6 percent y/y in Q1 after rising 2.3 percent in Q4 last year and a total of 7.2 percent in 2018. Imports dipped 2.9 percent after increases of 7.5 percent in Q4 and 14.3 percent last year.

―― The drivers of the modest GDP growth were domestic. Private consumption rose 4.6 percent y/y compared with 5.4 percent in Q4, with government spending up 3.3 percent from 1.4 percent, and combined private and public investment up 3.2 percent, a decline from 4.2 percent in the previous quarter.

Takeaway:

―― HSBC economists projected Thailand’s GDP to grow 3.5 percent this year after expanding 4.1 percent last year. Q1 weakness was “broad-based, with slower private consumption and fixed investment growth in addition to a contraction in net exports,” they said, adding that only government spending showed a healthy gain.

―― The government trimmed its annual GDP growth forecast from a range of 3.5 to 4.5 percent to a range of 3.3 to 3.8 percent. It also lowered its export outlook from 4.1 to 2.2 percent.

―― Thosaporn Sirisumphand, secretary general of the Office of the National Economic and Social Development Council, told news media that he believes the economy will pick up in the second half of the year once a new government is formed following the March 24 general election.

―― Downside risks are mainly external: the U.S.-China trade row and Britain’s exit from the European Union. Domestic political uncertainty remains as no single party has won a majority in the 500-seat House of Representatives. The pro-military party Palang Pracha Rath is expected to form the government.