Thailand’s economy grew at the slowest pace in almost five years in the second quarter as exports and tourism deteriorated, buffeted by US-China trade tensions and the strong baht.
Gross domestic product rose 2.3% from a year ago, down from 2.8% in the first quarter, the National Economic and Social Development Council (NESDC) said on Monday. That was the slowest pace since the third quarter of 2014. The expansion was in line with the median estimate of 2.3% in a Bloomberg survey of economists.
The state planning agency, reporting April-June data on Monday, reduced its forecast for 2019 growth to 2.7-3.2%, versus 3.3%-3.8% seen in May. It also sharply changed its estimate for this year's exports, now seeing 1.2% shrinkage instead of 2.2% growth.
A slowdown both domestically and abroad affected the quarter’s growth, NESDC secretary-general Thosaporn Sirisumphand said at a briefing.
The US-China trade war, global jitters and drought remain risks going forward, although a government stimulus package announced last week, as well as potential investment from companies relocating from China amid the trade war, could help offset the damage, he said.
Further stimulus is possible, including steps that focus on boosting private investment and tourism, Mr Thosaporn told reporters. The government also will likely boost investment through public spending and disbursements by state enterprises, he said.
Charnon Boonnuch of Nomura said he expects second half growth to rise to 3.4% from 2.6% in the first, helped by fiscal and monetary policy easing.
But as the economy is increasingly reliant on external demand, it was hard for such policies and measures "to truly make a significant impact on the slowing economy," said Kobsidthi Silpachai, head of capital markets research of Kasikornbank.
The April-June growth pace was affected by smaller gains from tourism and domestic consumption as high household debt restrained consumer spending.
In April-June, private consumption rose 4.4% from a year earlier and private investment rose 2.2%, while public consumption rose 1.1%, crimped by the delayed formation of a government after March's elections, planning agency data showed
Annual growth in foreign tourist numbers slowed to 1.1% in the June quarter from the previous period's 1.8%.
Given increased risks to growth, benign inflation and the strong baht, most economists expect the Bank of Thailand to cut its key interest rate later this year after a surprise easing on Aug 7. The next policy review is Sept 25.