Warning sounded on growth strains
THE economic recovery of the past year is likely to run out of steam next year, with experts warning of slowing growth.
“We expect that GDP growth in 2019 will be in the high 3s or low 4s,” said Pipat Luengnaruemitchai, assistant managing director, head of Private Wealth Management Research at Phatra Securities Plc, referring to the economy’s performance by percentage.
Pipat was addressing the Kingdom's economic outlook in 2019 at a press event held by Kiatnakin Bank on Wednesday night.
Matthew Circosta, an analyst for Moody's Investors Service (Singapore), said at a separate event: “We expect the Thai economy's GDP growth to be at 4 per cent this year. However, 2019 will experience slower growth, with predicted GDP growth of 3.7 per cent, and 3.5 per cent in 2020.”
Pipat said: “The reason why we can expect slower growth in 2019 is because tourism and exports, the key drivers of the Thai economy, have been weakening.”
Tourism in the Kingdom has been declining at an alarming rate. In August, 867,000 visited the country, down 11.77 per cent month on month. In September, only 648,000 Chinese tourists came, marking an even steeper 14.89 per cent fall month on month, according to the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB).
“Tourism accounts for up to 15 per cent of Thailand's GDP,” Pipat said. “If tourism stops growing, the country's GDP will take a direct hit, as seen in the third quarter of this year where a decline in tourism led to a GDP growth rate reduction from 4.9 per cent in the first quarter to only 3.3 per cent.”
On the export front, there have been signs of decline.
In September, the value of exports shrank 5.2 per cent year on year to US$20.699 billion and imports rose 9.9 per cent to $20.212 billion, yielding a trade surplus of $487 million for the month. However, exports did start to recover in October, growing by 8.7 per cent month on month, according to Pimchanok Vonkorpon, director-general of the ministry’s Trade Policy and Strategy Office.
Pipat said: “We expect exports to only grow by 5 to 6 per cent in 2019. This is mainly because of the shifting supply chains as a result of the ongoing trade war.”
Circosta chimed in by saying the US-China trade war is by far the biggest contributor to the decline in exports”. “The trade war is causing a disruption within the global supply chain, of which Thailand is a part. The Thai exports which have been hit the hardest are computer parts and electronics,” he said.
Exports of computer parts and circuits to China fell by 18.4 per cent in October, according to the Ministry of Commerce.
