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Thai economic growth accelerates in Q4 2018, likely to slow down slightly in 2019

Thai economic growth accelerated in the fourth quarter, with most indicators showing a rebound. However, the third quarter growth figures were downwardly revised.

The GDP growth accelerated to 0.8 percent quarterly, after a revised 0.3 percent contraction in the third quarter. On a year-on-year basis, growth accelerated to 3.7 percent last quarter from a revised 3.2 percent in the third quarter, bringing full-year 2018 growth to 4.1 percent, a rebound from a revised 4 percent recorded in 2017.

The turnaround on a quarterly basis was widespread. Private consumption, government spending and investment all rebounded. Exports of goods and services recovered, while imports dropped, resulting in a recovery in net exports.

On a year-on-year basis, private consumption and investment growth rebounded, while government spending growth eased. Growth of exports returned to positive territory, while growth of import decelerated, leading to a smaller drag from net exports.

The government’s infrastructure investment program is likely to gather pace in 2019 and should give a significant support to growth, noted ANZ in a research report. The Board of Investment statistics also indicate to a sound investment pipeline. Nevertheless, the upcoming election presents some uncertainty and political stability would be a key to continued rebound in private investment.

Meanwhile, the recent rebound in the tourism sector should aid in strengthening services exports, but decelerating global growth is a headwind for goods exports. In all, the 2019 growth is likely to be a bit softer than 2018.

“The Q4 growth outturn and downward revisions to Q3 growth suggest that the risks to our base case of 4.0 percent growth and a 25bp rate hike by the Bank of Thailand this year are tilted to the downside. We will be monitoring incoming data closely. Slowing economic activity or easing financial stability concerns would warrant a re-assessment of our forecasts”, added ANZ.

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