Thailand 2017 economic growth likely at 3.5 pct, says DBS

The economic growth of Thailand is expected to come in at 3.5 percent, despite risks of downward pressure on the economy. While the overall performance of the economy in 3Q would have disappointed many, there seems no compelling reason to change the outlook for now.

Thailand’s 3Q16 GDP growth came in at 3.2 percent. The numbers were pretty much underwhelming across the board, as the high base effects distorted both government consumption and investment in the period. Government consumption plunged by 5.8 percent while public investment fell 2.4 percent in the period. Overall investment growth came in a mere 1.4 percent, its slowest in a year.

The details suggest that the outlook ahead may not be too dire though. Exports of goods and services chalked a decent 3.4 percent y/y growth in 3Q, driven mostly by services (15 percent average growth in the past 3 quarters).

Exports of goods grew 0.4 percent in the period, bouncing back from the -0.9 percent recorded in the preceding quarter. If export growth can maintain the pace seen in 3Q, full-year export growth is set to come in close to 0 rather than -2 percent. Contribution from net exports to overall GDP growth will clearly be in the positive, DBS reported.

Further, private consumption growth came in at 3.5 percent y/y in the period. Private consumption has now averaged 3 percent growth in the past year, for the first time since mid-2013. While private consumption growth is unlikely to return to 4 percent anytime soon, it is likely to remain within the 3-3.5 percent range in 2017.

"Positive spillovers from the government’s proposed pump-priming, especially in the rural areas, are likely to be supportive in 2017. Downside risks remain but we maintain our 2017 GDP growth forecast at 3.5 percent," DBS commented in the report.