Thailand’s GDP expands by 2.8 pct y/y in Q1, logs weakest performance in four years

Thailand’s GDP expanded by 2.8 percent y/y in Q1, the weakest performance in four years. The decline in exports was a key drag, but private consumption and investment growth also slowed. Looking ahead, the economy faces multiple pressure points, ranging from weak external demand to domestic political uncertainty, according to the latest report from ANZ Research.

The breakdown showed a sharp decline in exports, while imports dipped slightly, resulting in net exports being a major drag on growth. Investment and private consumption growth also slowed, which more than offset the pick-up in government spending.

Notably, headline growth would have been weaker were it not for a continued build-up in Inventories. By sector, the manufacturing sector saw the sharpest slowdown, with growth at 0.6 percent y/y in Q1, down from 3.5 percent in Q4.

In sequential terms, the sector contracted by 1.9 percent q/q, the first decline since Q2 2015. Looking ahead, the economy continues to face pressure on multiple fronts, including a weak global trade environment, an inventory overhang, sluggish tourist arrivals, unfavourable weather, high household debt and political uncertainty.

Renewed US-China trade tensions are an additional threat and further clouds the export outlook.

"Our full-year growth forecast for 2019 is 3.2 percent, which pencils in a sub-3 percent growth in H1 and a pick-up in H2, helped by more favourable base effects and is premised on government formation taking place without material delays and a pick-up in infrastructure spending. The National Economic and Social Development Council (NESDC) is forecasting growth of 3.3-3.8 percent in 2019, down from an earlier projection of 3.5-4.5 percent," the report further commented.