Monday August 19 2019
Thailand Q2 GDP Growth Weakest in Near 5 Years
Nesdb, Thailand l Chusnul Ch Manan | chusnul@tradingeconomics.com

Thailand's GDP grew by 2.3 percent year-on-year in the second quarter of 2019, following a 2.8 percent expansion in the previous period and below market consensus of 2.4 percent. It was the weakest GDP growth rate since the third quarter 2014 mostly due to decline in exports and as private consumption, government spending, and investment rose at a softer pace.

On the expenditure side, private consumption increased 4.4 percent, compared to a 4.9 percent expansion in the prior quarter, mainly due to a rise spending in non-durable goods and semi-durable goods, linked to the government's welfare card program for low income earners. By contrast, durable spending fell, namely purchasing vehicles and net services.

Gross fixed capital formation advanced 2.0 percent, softer than 3.2 percent in Q1. Private investment grew 2.2 percent, easing from a 4.4 percent rise in Q1, mainly due to a 2.5 percent expansion of investment on machinery (from 5.1 percent in Q1) and spending on private construction which grew 0.9 percent, easing from 1.8 percent in Q1. Meanwhile, public investment expanded 1.4 percent (vs -0.1 percent Q1), largely due to an increase in construction (5.8 percent vs 4.1 percent).

Also, government spending went up 1.1 percent, decelerating sharply from 3.4 percent in Q1, driven by an increase of 1.0 percent in compensation of employees, lower than 1.7 percent previously along with a 5.0 percent rise of social transfers in kind, the same pace as in Q1. However, purchases from enterprises and abroad dropped 1.1 percent. The net external demand contributed negatively to GDP growth, as exports of goods and services slipped 6.1 percent (the same pace as in Q1) while imports of goods and services fell at a softer 2.7 percent (vs -0.1 percent in Q1).

On the production side, the non-agricultural sector expanded 2.6 percent, slowing from a 2.9 percent expansion in the previous three-month period. Output grew at a softer pace for: wholesale & retail trade (5.9 percent vs 6.8 percent in Q1); transportation & storage (2.5 percent vs 3.5 percent), accommodation & food service activities (3.7 percent vs 4.9 percent); health & social work (3.1 percent vs 3.5 percent), arts, entertainment & recreation (10.4 percent vs 11.6 percent), real estate, renting & business activities (3.1 percent vs 4.7 percent); finance & insurance activities (1.8 percent vs 2.0 percent); public administration & defence (0.4 percent vs 0.9 percent); water supply, sewerage, waste management & remediation activities (2.0 percent vs 4.9 percent), and other service activities (2.3 percent vs 2.5 percent). 

Conversely, manufacturing fell (-0.2 percent vs 0.6 percent in Q1), amid decreases in export-oriented industries such as computer, rubber and plastic product. Also, agriculture shrank 1.1 percent, reversing a 1.7 percent growth in the March quarter, as drought dented output of major crops, namely paddy, pineapple, sugarcane together with a deceleration in production of fruits and maize yields. Meantime, yields of vegetables and rubbers rose similar to production of livestock, namely chicken, hen's egg and swine.

On the other hand, faster growth was seen in electricity, gas & water supply (7.3 percent vs 5.4 percent); information & communication (9.3 percent vs 6.5 percent); construction (3.4 percent vs 3.0 percent). Gains were also registered in and education (1.6 percent vs 1.2 percent in Q1); professional, scientific & technical activities (2.3 percent vs 1.3 percent). In addition, output of mining and quarrying rebounded (6.8 percent vs -0.8 percent). 

In the first half of the year, the economy advanced 2.6 percent compared with the same period of 2018. For 2019, the NESDB revised its economic forecast to 2.7-3.2 percent from 3.3-3.8 percent in May, with exports seen contracting 1.2 percent (from 2.2 percent growth).





Monday August 19 2019
Thailand Quarterly GDP Growth Weakest in 3 Quarters
NESDB l Rida Husna | rida@tradingeconomics.com

Thailand's economy expanded 0.6 percent quarter-on-quarter in the three months to June 2019, slowing from a 1 percent growth in the previous period and missing market expectations of a 0.7 percent advance. This marked the lowest quarterly growth rate since a 0.2 percent contraction in the September quarter 2018, as private consumption growth was nearly steady, while there was a decline in both government spending and gross fixed capital formation.

On the expenditure side, private consumption rose by 0.9 percent in the second quarter, little-changed from a 1 percent increase in the prior quarter. At the same time, government spending  declined by 1.3 percent, the first quarterly decrease in three quarters, following a 1.7 percent growth in Q1. Also, gross fixed capital formation dropped 0.7 percent, the first quarterly fall in two years, after a 0.7 percent gain in Q1. Meanwhile, net external demand contributed positively to growth, as exports of goods and services rose 1.5 percent (from -4.1 percent in Q1), while imports contracted further -1.0 percent (from -2.3 percent in Q1).

On the production side, growth in the agriculture sector eased sharply (4.4 percent vs 11.9 percent in Q1), while non-agriculture rebounded (0.3 percent vs -0.2 percent). Within non-agriculture, there was an upturn  in both industrial sub-sector (0.4 percent vs -1.7 percent in Q1) and mining and quarrying (7.2 percent vs -2 percent), and a faster rise in electricity, gas, steam and airconditioning supply (2.1 percent vs 0.8 percent), while both manufacturing (-0.5 percent vs -1.7 percent) and water supply, sewerage, waste management and remediation activities (-0.1 percent vs -2.5 percent) decining less. At the same time, the service sector grew at a softer pace (0.2 percent vs 0.8 percent), mainly led by construction (0.4 percent vs 1.4 percent); health and social work (0.5 percent vs 1 percent); arts, entertainment and recreation (0.9 percent vs 1 percent), while output fell for transport & storage (-0.1 percent vs 0.1 percent); accommodation & food services (-0.6 percent vs 1.6 percent); real estate (-0.7 percent vs 1 percent); public administration and defence (-0.4 percent vs 1.4 percent), and education (-0.5 percent vs 1.8 percent).

Meantime, amid weakening global demand and ongoing trade conflict between US and China, the government revised down 2019 GDP growth forecast to a range of 2.7 to 3.2 percent from an earlier projections of 3.3 to 3.8 percent. It also saw 2019 exports to contract 1.2 percent, instead of 2.2 percent growth previously estimated.




Wednesday August 07 2019
Thailand Unexpectedly Cuts Interest Rate to 1.50%
Bank of Thailand l Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The Bank of Thailand slashed its policy rate by 25 bps to 1.50 percent on its August 7th 2019 meeting, for the first time since 2015, surprising markets who expected it to be left steady at 1.75 percent. Policymakers voiced concerns about the strength of the baht and underscored that a more accommodative monetary policy stance would contribute to boost the economy and support the rise of headline inflation toward target. The bank added that will continue to closely monitor developments of economic growth, inflation, and financial stability, together with associated risks, especially impacts of trade tensions.

Statement by the Bank of Thailand: 

The Thai economy was expected to expand at a lower rate than previously assessed and below potential. Merchandise exports contracted more than the previous assessment due to the slowdown of trading partner economies and global trade, which were affected by intensifying trade tensions that could expand to other countries. Tourism would grow at a lower rate. Regarding domestic demand, private consumption was expected to moderate in tandem with a decline in non-farm household income and employment, particularly employment in the export-related manufacturing sector. In addition, private consumption would be restrained by elevated household debt. Private investment was projected to slow down. However, the relocation of production base to Thailand and public-private partnership projects for infrastructure investment would support investment in the period ahead. Public expenditure would grow at a slower pace than previously estimated on account of public investment, which was partly a result of constrained budget disbursement, as well as the expected delay in the enactment of the Annual Budget Expenditure Act, B.E. 2563 (A.D. 2020). The Committee would monitor external risks from intensifying trade tensions, the economic outlook of China and advanced economies that could affect domestic demand, as well as geopolitical risks. Furthermore, the Committee would monitor policy implementation of the new government and public expenditure, as well as the progress of major infrastructure investment and its knock-on effects on private investment, which could affect the momentum of economic growth in the period ahead.

The annual average of headline inflation was projected to be below the lower bound of the target. Key drivers were energy prices, which declined at a fast pace, and core inflation, which was expected to moderate owing to subdued demand-pull inflationary pressures. The Committee viewed that structural changes contributed to more persistent inflation than in the past. Such changes included the expansion of e-commerce, rising price competition, and technological development which reduced costs of production.

Financial conditions over the previous period had been accommodative, with ample liquidity in the financial system. Real interest rates remained at a low level, allowing financing by the private sector to continue expanding. However, loans extended to both businesses and consumers would exhibit slower growth. With regard to exchange rates, the Committee expressed concerns over the baht appreciation against trading partner currencies, which might affect the
economy to a larger degree amid intensifying trade tensions. However, The Committee would closely monitor developments of exchange rates and capital flows as well as assess the necessity of additional appropriate measures. 

Looking ahead, the Committee would continue to closely monitor developments of economic growth, inflation, and financial stability, together with associated risks,especially impacts of trade tensions, in deliberating appropriate monetary policy going forward. Nevertheless, the Thai economy would continue to face structural problems, which would affect competitiveness and economic growth outlook going forward. This should be firmly addressed by all related parties.

The Committee voted 5 to 2 to cut the policy rate by 0.25 percentage point from 1.75 to 1.50 percent, effective immediately. Two members voted to maintain the policy rate at 1.75 percent.




Wednesday June 26 2019
Thailand Leaves Monetary Policy Unchanged
Bank of Thailand l Stefanie Moya | stefanie.moya@tradingeconomics.com

The Bank of Thailand held its policy rate at 1.75 percent on its June 26th 2019 meeting, as widely expected. Policymakers said that the current accommodating monetary policy stance remains appropriate for economic growth given the inflation target. The Committee slashed its 2019 economic growth outlook to 3.3 percent from a preliminary 3.8 percent while unrevised its inflation forecasts (1 percent for 2019) and projected that exports will be flat. Policymakers added that they will continue to monitor developments on economic growth, inflation, and financial stability, together with associated risks, namely trade tensions.

Statement by the Bank of Thailand: 

The Thai economy was expected to expand at a slower pace than previously assessed. Merchandise exports would grow at a significantly slower pace than the previous assessment due to the slowdown of trading partner economies and global trade, which were affected by intensifying trade tensions, particularly between the US and China. Tourism would grow at a lower rate relative to the previous assessment due mainly to Chinese tourist figures. Regarding domestic demand, private consumption was expected to continue expanding. Nevertheless, private consumption would be restrained by elevated household debt, with signs of moderation in earnings and employment in the export-related manufacturing sectors. Private investment was projected to slowdown. However, the relocation of production base to Thailand and public-private partnership projects for infrastructure investment would support investment in the period ahead. Meanwhile, public expenditure would grow at a slower pace than previously estimated due to the expected delay in the enactment of the Annual Budget Expenditure Act, B.E. 2563 (A.D. 2020) as well as postponement of some state-owned enterprise investment. The Committee would monitor external risks from trade tensions, the economic outlook of China and advanced economies that could affect domestic demand, as well as geopolitical risks. Furthermore, the Committee would monitor policy implementation of the new government and public expenditure, as well as the progress of major infrastructure investment and its knock-on effects on private investment, which could affect the momentum of economic growth in the period ahead.

The annual average of headline inflation would be largely unchanged from the previous projection, although fresh food prices were expected to increase from the previous meeting. Meanwhile, core inflation would be mostly in line with the previous projection. The Committee viewed that structural changes contributed to more persistent inflation than in the past. Such changes included the expansion of e-commerce, rising price competition, and technological development which reduced costs of production. 

Financial conditions over the previous period had been accommodative and conducive to economic growth, with ample liquidity in the financial system. Real interest rates remained at a low level, allowing financing by the private sector to continue expanding. Loans extended to businesses and consumers continued to grow. With regard to exchange rates, the baht appreciated at a somewhat fast paceand outperformed regional currencies, which was a result of the weakening US dollar, short-term capital inflows, and domestic factors. The Committee expressed concerns over the baht appreciation which might not be consistent with economic fundamentals and would continue to closely monitor developments of exchange rates and capital inflows. Financial stability remained sound overall but there remained a need to monitor risks that might pose vulnerabilities to financial stability in the future. The Committee viewed that the implemented macroprudential measures and the increased policy rate had to some extent curbed accumulationof vulnerabilities in the financial system from the search-for-yield behavior in the low interest rate environment that might lead to underpricing of risks. 

Looking ahead, the Thai economy would expand at a slower pace due mainly to the softening momentum of external demand. The Committee would continue to monitor developments of economic growth, inflation, and financial stability, together with associated risks, especially impacts of trade tensions, in deliberating appropriate monetary policy in the period ahead.


Tuesday May 21 2019
Thailand Q1 GDP Annual Growth Weakest in Over 4 Years
Nesdb, Thailand l Chusnul Ch Manan | chusnul@tradingeconomics.com

Thailand's gross domestic product grew by 2.8 percent year-on-year in the first quarter of 2019, following a downwardly revised 3.6 percent expansion in the previous period and below market consensus of 3.0 percent. It was the weakest GDP growth rate since the fourth quarter 2014, as both private consumption and investment rose softer, and net external contributed negatively to GDP growth

On the expenditure side, private consumption increased 4.6 percent, compared to a 5.4 percent expansion in the prior quarter, mainly due to a rise in non-farm income. Durable spending, in particular spending on personal vehicles increased robustly. Meanwhile, spending on non-durable goods continued to rise, particular on food items and other non-durable goods. On the other hand, spending on semi-durable goods and net services slowed down.

Gross fixed capital formation advanced 3.2 percent, softer than 4.2 percent in Q4. Private investment grew 4.4 percent, easing from a 5.5 percent rise in Q4, mainly due to a 5.5 percent expansion of investment on machinery (from 5.6 percent in Q4). On the other hand, spending on private construction expanded 1.8 percent, easing from 5.1 percent in Q4. Meanwhile, public investment contracted 0.1 percent (the same as in Q4), largely due to a decrease in enterprise investment (-1.4 percent vs 4.7 percent) while government investment rebounded (0.6 percent vs -3.0 percent).

Meanwhile, net external contributed negatively to GDP growth, as exports of goods and services fell 4.9 percent (vs 0.7 percent in Q4) while imports of goods and services dropped at a softer 0.2 percent (vs 5.7 percent in Q4).

Conversely, government spending went up 3.3 percent, compared with 1.4 percent in Q4, attributed mainly to a rise in compensation of employees (1.7 percent) along with social transfer in kind (5.6 percent). Also, purchases from enterprises and abroad consumption of fixed capital rose by 5.6 percent and 1.9 percent, respectively.

On the production side, the non-agricultural sector expanded 3.0 percent, slowing from 4.0 percent expansion in the previous three-month period. Output grew at a softer pace for: manufacturing (0.6 percent vs 3.5 percent in Q4); wholesale and retail trade (6.8 percent vs 7.5 percent); information and communication (6.8 percent vs 6.9 percent); transportation and storage (3.4 percent vs 5.4 percent), accomodation and food service activities (4.9 percent vs 5.3 percent); health and social work (3.9 percent vs 4.3 percent), arts, entertaintment and recreation (11.8 percent vs 12.5 percent), professional, scientific and technical activities (1.2 percent vs 3.4 percent); real estate, renting and business activities (4.7 percent vs 4.9 percent); construction (3.0 percent vs 3.4 percent); other service activities (2.5 percent vs 4.3 percent). On the other hand, faster growth was seen in electricity, gas and water supply (5.4 percent vs 5.0 percent); financial and insurance activities (2.4 percent vs 1.8 percent); and public administration and defence (0.9 percent vs 0.1 percent).

Gains were also registered in water supply, sewerage, waste management and remediation activities (4.9 percent vs 4.5 percent) and education (1.2 percent vs -0.7 percent in Q4). Also, agriculture increased 0.9 percent, accelerating from a 0.7 percent growth in the December quarter, amid higher yields of major crops, namely paddy, cassava, palm oil and rubber. Also, production of livestock such as swine and chicken and eggs increased. By contrast, output of mining and quarrying shrank (-0.9 percent vs -0.7 percent). 

On a quarterly basis, the GDP expanded 1.0 percent in the three months to March, after an upwardly revised 0.9 percent expansion in the previous period and below market consensus of a 1.4 percent growth. It was the second straight quarter of quarterly expansion.

For 2019, the NESDB revised its economic forecast to 3.3-3.8 percent from 3.5-4.5 percent in February, with exports seen up 2.2 percent (from 4.1 percent) and private consumption and total investment to rise 4.2 percent (the same pace as previously estimated) and 4.5 percent (from 5.1 percent), respectively.
 
 



Tuesday May 21 2019
Thailand Quarterly GDP Growth Below Forecasts in Q1
NESDB l Rida Husna | rida@tradingeconomics.com

Thailand's economy expanded 1.0 percent quarter-on-quarter in the three months to March 2019, little-changed from an upwardly revised 0.9 percent growth in the previous period and missing market estimates of a 1.4 percent advance. Private consumption growth was steady while fixed investment slowed markedly despite a faster rise in government spending. Meantime, net exports contributed negatively to the GDP growth.

On the expenditure side, private consumption rose by 0.8 percent in the first quarter, the same as in the preceding quarter and government spending advanced faster (1.8 percent vs 1.5 percent), while gross fixed capital formation softened (0.8 percent vs 1.4 percent in Q4). Meantime, net external demand contributed negatively to growth, as exports of goods and services tumbled (-3.3 percent vs 2.3 percent in Q4), and imports contracted further (-2.5 percent vs -1.9 percent).

On the production side, the agriculture sector rebounded sharply (10.1 percent vs -7.8 percent in Q4). At the same time, non-agriculture fell for the first time since the second quarter 2011, with the industrial sub-sector shrinking (-1.7 percent vs 2.2 percent in Q4), in particular mining and quarrying (-1.9 percent vs 2 percent in Q4); manufacturing (-1.9 percent vs 2 percent) and water supply, sewerage, waste management and remediation activities (-2.4 percent vs 2.1 percent). Meanwhile, the service sector continued to grow (0.9 percent vs 2.5 percent), namely construction (1.7 percent vs 0.1 percent); accommodation & food services (1.9 percent vs 4 percent); education (1.9 percent vs 2 percent); and health & social work (1.5 percent vs 2.1 percent).   

Year-on-year, the economy grew an annual 2.8 percent in the first quarter, also missing consensus of  a 3 percent expansion and following 3.7 percent growth in the fourth quarter.

For 2019, the government revised down GDP growth forecast to a range of 3.3 to 3.8 percent from an earlier projections of 3.5 to 4.5 percent. It also lowered the export outlook for the year to 2.2 percent from 4.1 percent previously estimated, amid a slowdown in global demand and uncertainty coming from Sino-US trade tension.

In 2018, the Thai economy advanced 4.1 percent,  the strongest pace of annual expansion since 2012.


Wednesday May 08 2019
Thailand Holds Policy Rate at 1.75%
Bank of Thailand l Stefanie Moya | stefanie.moya@tradingeconomics.com

The Bank of Thailand left its policy rate unchanged at 1.75 percent on its May 5th 2019 meeting, as widely expected. Policymakers said that the current accommodating monetary policy stance remains appropriate and would continue to monitor developments of economic growth, inflation, financial stability, and risks associated with it. The Committee noted that the economy is growing at a softer pace than expected and inflation is expected to be around the lower bound of the target range. The annual inflation rate fell slightly to 1.23 percent in April from 1.24 percent in March, amid a slowdown in cost of food and non-alcoholic beverages and housing.

Statement by the Bank of Thailand: 

The Thai economy was expected to expand at a slower pace than previously assessed owing to merchandise exports and investment. Merchandise exports would grow at a slower pace than previously assessed due to the global economic slowdown, a down cycle of electronic products as well as impacts from trade protectionist measures between the US and China. Tourism would continue to gain traction. Regarding domestic demand, private consumption was expected to continue expanding. Nevertheless, private consumption was restrained by elevated household debt and the overall employment that started to flatten out, with signs of moderation in employment in the construction and export-related manufacturing sectors. 

The annual average of headline inflation would be largely unchanged from the previous projection. The increase in energy prices since the previous meeting offsetted lower-than-expected increase in fresh food prices. Nevertheless, there remained risks to inflation due to the impact of drought. Meanwhile, core inflation would remain broadlyunchanged from the previous projection. The Committee viewed that structural changes contributed to more persistent inflation than in the past. Such changes included the expansion of e-commerce, rising price competition, and technological development which
reduced costs of production.  

Financial conditions over the previous period had been accommodative and conducive to economic growth, with ample liquidity in the financial system. Real interest rates remained at a low level, allowing financing by the private sector to continue expanding. Loans extended to businesses and consumers continued to grow. With regard to exchange rates, the Thai baht depreciated against the US dollar in the intermeeting period in line with regional currencies. Looking ahead, the baht would likely remain volatile due to both domestic and external uncertainties, and thus the Committee would continue to closely monitor exchange rate developments as well as their impacts on the economy. 

Financial stability remained sound overall but there remained a need to monitor risks that might pose vulnerabilities to financial stability in the future. The Committee viewed that the implemented macroprudential measures and the increased policy rate would to some extent help curb accumulation of vulnerabilities in the financial system from the search-for-yield behavior in the low interest rate environment that might lead to underpricing of risks. Nevertheless, the Committee would monitor rising household debt accumulation driven particularly by auto-related loans, growth in assets held by saving cooperatives and the interconnectedness among saving cooperatives, adjustments in the real estate sector after the implementation of the revised loan-to-value ratio (LTV) measure, and leverage by large corporates that could underpricerisks. In the following period, there remained a need to address financial stability risks through a combination of tools, including the appropriate policy interest rate as well as microprudential and macroprudential measures which would need to place greater emphasis on debt serviceability of borrowers.

Looking ahead, the Thai economy was projected to continue to gain traction although the external demand momentum might slow down. The Committee viewed that current accommodative monetary policy stance would remain appropriate and would continue to monitor developments of economic growth, inflation, and financial stability, together with associated risks, in deliberating appropriate monetary policy in the period ahead.


Wednesday March 20 2019
Thailand Leaves Interest Rate Steady as Expected
Bank of Thailand l Chusnul Ch Manan | chusnul@tradingeconomics.com

The Bank of Thailand kept the policy rate at 1.75 percent on March 2019 meeting, as widely expected. The Committee said that the current accommodating monetary policy stance would remain appropriate in the period ahead and would continue to support economic growth, financial stability and inflation. For 2019, the Bank revised its economic growth forecast to 3.8 percent from 4.0 percent while inflation was 1 percent, unchanged from seen three months ago.

Statement by the Bank of Thailand: 

Despite a slight downward revision to economic projection, the Thai economy as a whole was expected to continue expanding around its potential on the back of domestic demand. Private consumption was expected to continue expanding on the back of increasingly broad-based improvements in both farm and non-farm income with additional supports from government measures. Nevertheless, private consumption was restrained by elevated household debt. Private investment was projected to continue expanding thanks to the relocation of production base to Thailand, public-private partnership projects for infrastructure investment, and favourable business sentiment. Meanwhile, merchandise exports grew at a slower pace than previously assessed due to the global economic slowdown, a down cycle of electronic products as well as impacts from trade protectionism measures between the US and China. Tourism continued to gain traction. Public expenditure, both consumption and investment, would grow at a slower pace than previously assessed, which was partly due to delay in some state-owned enterprise investment projects.
 
The annual average of headline inflation would be largely unchanged from the previous projection. This was attributable to higher energy prices relative to the assessment in the previous meeting. In addition, fresh food prices increased as excess supply alleviated and the drought condition intensified, which offset effects of lower core inflation compared to the previous assessment.
 
Financial conditions over the previous period had been accommodative and conducive to economic growth, with ample liquidity in the financial system. Real interest rates remained at a low level, allowing financing by the private sector to continue expanding. Loans extended to businesses and consumers continued to grow. With regard to exchange rates, the Thai baht depreciated against the US dollar in the intermeeting period in line with regional currencies. Looking ahead, the baht would likely remain volatile due to both domestic and external uncertainties, and thus the Committee would continue to closely monitor exchange rate developments as well as their impacts on the economy.
 
Financial stability remained sound overall but there remained a need to monitor risks that might pose vulnerabilities to financial stability in the future. The Committee viewed that the implemented macroprudential measures and the increased policy rate would to some extent help curb accumulation of vulnerabilities in the financial system from the search-for-yield behavior in the low interest rate environment that might lead to underpricing of risks.
 
Looking ahead, the Thai economy was projected to continue to gain traction although the external demand momentum might slow down. The Committee viewed that current accommodative monetary policy stance would remain appropriate and would continue to monitor developments of economic growth, inflation, and financial stability, together with associated risks, in deliberating appropriate monetary policy in the period ahead.


Monday February 18 2019
Thailand Q4 GDP Annual Growth Above Expectations
Nesdb, Thailand l Chusnul Ch Manan| chusnul@tradingeconomics.com

Thailand's gross domestic product grew by 3.7 percent year-on-year in the fourth quarter of 2018, following a downwardly revised 3.2 percent expansion in the previous period and slightly above market consensus of 3.6 percent. Both private consumption and investment rose faster, while government spending slowed and net external contributed negatively to GDP growth.

On the expenditure side, private consumption increased 5.3 percent, compared to a 5.2 percent expansion in the prior quarter, mainly due to a rise in both farm and non-farm income. Durable spending, in particular spending on personal vehicles also increased robustly. Meantime, both semi-durable and non-durable goods spending, together with net services also sturdily expanded.

Gross fixed capital formation advanced 4.2 percent, faster than 3.9 percent in Q3. Private investment grew 5.5 percent, mainly due to a 5.6 percent expansion of investment on machinery. In addition, spending on private construction expanded 5.1 percent. Meanwhile, public investment contracted 0.1 percent ( vs 4.2 percent in Q3), largely due to a decrease in government investment (-3.0 percent) and a slowdown in state enterprise investment (4.6 percent vs 9.9 percent).

Conversely, government spending went up 1.4 percent, compared with 1.9 percent in Q3, attributed mainly to a rise in purchase of goods and services (11.3 percent vs 2.1 percent) along with compensation of employees (0.1 percent vs -0.5 percent). However, social transfer in kind fell (-8.9 percent vs 26.2 percent in Q3).

Meanwhile, net external contributed negatively to GDP growth, as exports of goods and services went up only 0.6 percent (vs -0.9 percent in Q3) while imports of goods and services rose at a faster 5.6 percent (vs 11.0 percent in Q3).

On the production side, the non-agricultural sector expanded 4.0 percent, accelerating from 3.2 percent expansion in the previous three-month period. Output grew at a faster pace for: manufacturing (3.3 percent vs 1.6 percent in Q3); wholesale and retail trade (7.5 percent vs 7.3 percent); transport, storage and communication (6.1 percent vs 5.3 percent); hotels and restaurants (5.3 percent vs 4.1 percent); electricity, gas and water supply (5.7 percent vs 1.1 percent) and health and social work (4.0 percent vs 2.1 percent). 

On the other hand, slower growth was seen in real estate, renting and business activities (3.6 percent vs 4.2 percent); financial intermediation (1.8 percent vs 3.1 percent); construction (3.4 percent vs 4.5 percent); other community, social and personal services (7.0 percent vs 7.8 percent) and public administration and defence (0.1 percent vs 0.4 percent). Also, agriculture increased 1.4 percent, easing from a 2.7 percent growth in the September quarter, amid lower yields of rubber, fruits and oil palm while those of paddy, maiza and cassava went up. Also, production of livestock such as swine and chicken decreased. In addition, fishing output continued to fall on lower external demand (-2.5 percent vs -3 percent). Contractions were also registered in mining and quarrying (-0.7 percent vs -1.3 percent) and education (-0.7 percent vs -1.2 percent in Q3).

On a quarterly basis, the GDP expanded 0.8 percent in the three months to December, reversing from a downwardly revised 0.3 percent contraction in the previous period and beating market consensus of a 0.6 percent expansion.

In 2018, the Thai economy advanced 4.1 percent, compared to an upwardly revised 4.0 percent expansion in 2017, and marking the fastest growth since 2012.

For 2019, the NESDB expects Thailand to grow between 3.5-4.5 percent, with exports seen up 4.1 percent and private consumption and total investment to rise 4.2 percent and 5.1 percent, respectively.



Monday February 18 2019
Thailand Quarterly GDP Growth Rebounds Strongly in Q4
NESDB l Rida Husna | rida@tradingeconomics.com

Thailand's economy expanded 0.8 percent quarter-on-quarter in the three months to December 2018, beating market estimates of a 0.6 percent growth and reversing from a downwardly revised 0.3 percent contraction in the previous quarter. Private consumption and fixed investment growth accelerated while government spending rebounded. Also, net external demand contributed positively to the GDP growth.

On the expenditure side, private consumption increased by 10.2 percent, compared to a 1.6 percent advance in the previous quarter and government spending went up 1.4 percent, recovering modestly from a 0.6 percent drop in the September quarter and marking the first quarterly rise in three quarters. In addition, gross fixed capital formation rose by 1.4 percent, twice faster than a 0.7 percent rise in the third quarter. Meantime, net external demand contributed positively to growth, as exports of goods and services expanded 1.9 percent, swinging strongly from a 5.6 percent fall in the preceding quarter, while imports shrank 1.6 percent, after a 2.8 percent growth in the third quarter.

On the production side, output grew at a faster rate mainly for manufacturing (1.7 percent vs 0.6 percent in Q3); wholesale and retail trade; repair of motor (2.7 percent vs 2.2 percent); utilities (4 percent vs 2.2 percent) and transport, storage & communication (2.5 percent vs 0.4 percent). In addition, activity rebounded in mining & quarrying (3.1 percent vs -1.5 percent); hotels & restaurants (3.6 percent vs -1 percent); education (1.8 percent vs -1.6 percent) and health & social work (1.8 percent vs -1.2 percent). Meanwhile, the agriculture sector contracted 8 percent, softer than a 10.6 percent fall in the prior three month-period. Also, financial intermediation (-0.5 percent vs -0.8 percent) and construction (-0.7 percent vs 3 percent) shrank.

Year-on-year, the economy grew an annual 3.7 percent in the December quarter, slightly above consensus of  a 3.6 percent expansion and following a downwardly revised 3.2 percent growth in the third quarter, which was the weakest yearly growth rate in three years.

In 2018, the Thai economy advanced 4.1 percent, compared to an upwardly revised 4.0 percent growth in a year earlier and market consensus of 4.2 percent. It marked the strongest pace of expansion since 2012.

For this year, the government expects the economy to grow between 3.5 to 4.5 percent, unchanged from an earlier projection, supported by private consumption, investment and tourism. Meanwhile, export growth outlook for the year was lowered to 4.1 percent from 4.6 percent previously estimated, amid a slowdown in global demand and uncertainty coming from Sino-US trade tension.