FRIDAY, March 29, 2024
nationthailand

GDP expands at slowest pace since 4Q/2014

GDP expands at slowest pace since 4Q/2014

THAILAND’S GDP in the first quarter of 2019 grew by 2.8 per cent year on year (YoY), below consensus estimate of 3.0 per cent and a marked slowdown from the 3.6 per cent in the previous quarter.

It was the weakest expansion since the fourth quarter of 2014 and the slowdown was driven by weakness in external sectors with exports of goods contracting 5.4 per cent YoY and exports of services shrinking 3.6 per cent YoY. 
 Meanwhile, domestic demand stayed robust with private consumption rising 4.6% YoY and private investment expanding 4.4% YoY. Private investment, however, remained lacklustre at -0.1 per cent YoY. 
Monthly economic indicators suggest that domestic demand momentum has stalled toward the end of the first quarter. Private consumption, the harbinger of growth over the past few quarters, is likely to decelerate over the remainder of the year amid falling farm income, deterioration in consumer confidence and political uncertainties. 
Export growth has more pronounced downside risk as trade tension re-escalate after US threatened to raise tariffs on all imports from China. Meanwhile, tourism sector will likely remain lacklustre as China economy weakens and the Chinese yuan resumes its weakening trend. 
Concerning the trade war, chances that China and the US will agree on a deal before June deadline is quite slim in our view as China's policy tone has become tougher recently. The US authorities have already indicated their plan to impose tariffs on the remaining Chinese exports. If they do, the trade war would escalate to a level that causes significant economic impact on both sides as the list of products in question include mostly consumer goods such as smartphones, computers and textiles, and US consumers are more dependent on China for these goods.
With no sign of an improvement in external demand in sight, we maintain our below-consensus GDP growth forecast at 3.5% for 2019.

ContrIbuted by KOMSORN PRAKOBPHOL, head of TIsco Economic Strategy Unit (ESU)
 

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