Thailand first-quarter GDP growth slows to weakest in over four years, outlook murky

23-May-2019 Intellasia | Reuters | 6:00 AM Print This Post

Thailand’s economy grew at its slowest pace in more than four years in the first quarter, and by less than expected, hurt by a drop in exports and public investment.

The state planning agency, reporting January-March data on Tuesday, cut its forecast for 2019 growth to 3.3%-3.8 percent from the 3.5%-4.5 percent range seen in February. And it lowered its estimate for this year’s exports, the main growth driver.

The outlook downgrade came amid rising global trade tensions and lingering political uncertainty at home as political parties are still vying to form a new governmentlikely to be a fragile oneafter a March 24 election.

“The economy slowed markedly in Q1 on the back of rising external headwinds and high political uncertainty,” said Charnon Boonnuch, a Nomura economist in Singapore.

For now, Nomura is keeping its full-year growth forecast of 3.4%, though “the balance of risks remains tilted to the downside”, he said.

With GDP data from Singapore and Thailand on Tuesday, every major Southeast Asian economy has reported slower annual growth in the first quarter than in 2018′s last three months, rooted in the US-China trade war and a global growth slowdown.

Thailand, the region’s second-largest economy, reported first quarter growth of 2.8 percent from a year earlierthe smallest since 2014′s final period.

That was slower than 3.0 percent seen in a Reuters poll and the revised 3.6 percent pace for October-December.

On a quarterly basis, growth was a seasonally adjusted 1.0%, weaker than the poll’s 1.4 percent forecast and the October-December quarter’s revised 0.9%.

The National Economic and Social Development Council cut its 2019 export growth outlook to 2.2 percent from 4.1%. Thailand’s exports, worth about two-thirds of the economy, dropped 3.6 percent in the first quarter from a year earlier. In 2018, they rose 7.2 percent.

Prime minister Prayuth Chan-ocha said on Tuesday the government already pays special attention to the US-Sino trade dispute and he will meet with the private sector to discuss it on Wednesday.

The government has asked the commerce ministry to seek new markets, especially smaller ones, “so any impact on us should not be much at the moment,” he said.

Last week, the commerce ministry said it feared losing $6.7 billion in exports this year because of recent US tariffs on Chinese goods.

The planning agency said growth should improve in the second half as exports are expected to gradually recover.

Also affecting the growth pace is that slowed gains for tourism and high household debt have curbed consumer spending.

In the March quarter, private consumption rose 4.6 percent from a year earlier and private investment increased 4.4%, but public investment fell 0.1%, NESDC data showed.

In January-March, the number of foreign tourists rose 1.5 percent from a year earlier, compared with a 4.3 percent rise in the previous three months.

The Thai baht slipped as much as 0.7 percent to 31.94 against the US dollar, its weakest in two weeks on the soft economic data.

As risks increase and inflation is benign, most economists expect the Bank of Thailand to keep its policy rate unchanged at 1.75 percent for the rest of 2019. The BOT will next review monetary policy on June 19.

Given the growth rate, “it is most likely monetary policymakers will stay pat on rates until there is clarity on both the external and internal fronts, such as the formation of the next government,” said Kobsidthi Silpachai, head of capital markets research of Kasikornbank.

($1 = 31.82 baht)–finance.html


Category: Thailand

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