BANGKOK: Thailand’s economy expanded at its slowest quarterly pace in a year in the third quarter on sluggish exports and a slowdown in private consumption, raising the chances for more stimulus as policymakers try to shore up flagging growth.
The government once again cut its 2019 growth estimate as the Sino-US trade war and a relatively strong baht exacted a toll on the export-dependent economy.
The state planning agency on Monday (Nov 18) cut its forecast for 2019 growth to 2.6 per cent from 2.7 to 3.2 per cent projected three months ago.
It also lowered its estimate for this year’s exports to a 2 per cent decline from an earlier forecast 1.2 per cent fall.
The downgraded estimates come as Asia’s manufacturing economies endure a slump in global demand from Beijing’s 16-month long trade standoff with Washington. The baht, Asia’s best performing currency this year, has added further pressure.
Southeast Asia’s second-largest economy grew a seasonally adjusted 0.1 per cent in July to September from the prior quarter, the weakest pace since the third quarter of 2018. That matched the 0.1 per cent growth seen in a Reuters poll but below a downwardly revised 0.4 per cent pace for April to June.
From a year earlier, growth was 2.4 per cent, below the poll’s 2.6 per cent forecast, though slightly higher than April to June’s 2.3 per cent, which was the weakest in nearly five years.
“The downward revision in the 2Q19 GDP is what likely prevented the start of the countdown towards a technical recession,” said Kobsidthi Silpachai, head of capital markets research of Kasikornbank.
“The tepid economic performance underscores the need for stimulus,” he said, although hoping that monetary easing would be a panacea for the economy’s problems was “wishful thinking”.
Wichayayuth Boonchit, a deputy secretary general, told a news conference: “The economy in the third quarter recovered more slowly than expected due to global economic problems.”
He said the strong baht affected exports and private investment, adding the currency’s strength would continue for awhile. The baht is Asia’s best performing currency this year, having risen 7.6 per cent against the dollar so far this year.
Thai exports showed no growth in the third quarter from a year earlier after two quarters of contraction, while manufacturing slumped 4.2 per cent, although public investment rose to 3.7 per cent, agency data showed.
In a bid to boost sluggish domestic activity, the government introduced a US$10 billion stimulus package in August and has said additional measures will be considered if needed to shore up growth.
On Nov 6, the Bank of Thailand (BOT) cut its policy interest rate to a record low of 1.25 per cent, the second easing in three months.
Deputy BOT Governor Mathee Supapongse told Reuters last week there was still scope to support the economy if needed.
For 2020, the planning agency predicted stronger GDP growth of 2.7 to 3.7 per cent, and that exports will rebound, rising 2.3 per cent.
Third-quarter growth was also affected by sluggish domestic demand, curbed by elevated household debt. Growth in private consumption slowed to 4.2 per cent from a year earlier, data showed.
However, foreign tourist numbers rose 7.2 per cent, helped by last year’s low comparative levels following a deadly boat accident.