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Has Thailand’s GDP Economic Growth Really Bottomed?

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Headline GDP growth in Thailand improved slightly in the third quarter but the main GDP drivers are still missing in action. According to ING the Bank of Thailand will leave policies on hold in the rest of 2019 and throughout 2020

Thailand’s economy expanded 2.4% year-on-year in 3Q19, a slightly better rate than 2.3% in 2Q. It was still short of the 2.7% median expectation in the Bloomberg survey. 0.1% quarter-on-quarter (seasonally adjusted) growth moderated from 0.4% in the previous quarter, which was the slowest pace in the last four quarters.

Net exports displaced domestic demand as a driver of GDP growth. A 4.3 percentage point contribution of net exports to yearly GDP growth was a significant shift after large drags in the previous four quarters.

Shrinking private consumption

However, that’s not a particularly healthy sign because it just mirrors the weakness of domestic spending denting imports of goods and services. This is further reflected by the shrinking private consumption contribution to GDP growth.

In a hopeful sign of stimulus kicking in, growth of government spending improved to 1.7% YoY from 1.0%, though in terms of the actual contribution to GDP growth, it’s still a weak link. One small silver lining in what was otherwise a fairly dismal set of numbers was signs of some recovery in fixed capital formation growth.

From the industry side, manufacturing remained one of the main drags on GDP growth, but it was offset by firmer growth by agriculture, mining, and services.

Source: ING