Thai economy expands above expectations in Q3, BoT likely to keep policy rate on hold through 2018

The Thai economy grew above market expectations in the third quarter of this year. The GDP expanded 4.3 percent year-on-year in the September quarter. External trade continued to underpin the economic growth with total exports growing 7.4 percent year-on-year in the third quarter from 6 percent previously. Government consumption expanded 2.8 percent year-on-year in the third quarter from 2.6 percent in the prior quarter. Altogether, public consumption and net exports added 1.7 percentage points to the overall growth.

According to an ANZ research report, the Thai economy is expected to grow 3.5 percent in the whole of this year, and the risk to this forecast in on the upside. But the continued rise in annual growth concealed the continuous weakness in domestic demand, stated ANZ. Household spending growth was widely stable at 3.1 percent year-on-year. Meanwhile, investment activity remained uninspiring, growing 1.2 percent year-on-year.

On a sequential basis, the Thai economic growth alleviated to 1 percent from the upwardly revised growth of 1.4 percent in the second quarter.

Private investment is now expected to pick up if the recovery is to intensify in 2018. External demand has given sufficient cushion to growth. But the government expects export growth to ease to 5 percent in 2018. While the domestic demand is showing hopeful signs of rebound, it still has to gain enough momentum to exert considerable pressure on inflation.

“We continue to expect the Bank of Thailand to keep its policy rate unchanged through 2018”, added ANZ.

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