The Asian Development Bank (ADB) has slashed its economic growth forecasts for Thailand to 4.3% this year and 4.1% next year as the global economy sputters.
The growth forecast for 2018 was trimmed from 4.5% predicted in September to 4.3% after the third quarter expansion slowed to 3.3% from 4.6% in the second quarter, according to an update of the Manila-based institution's Asian Development Outlook report.
Growth in domestic consumption and private investment were offset by falling exports in the third quarter. On the production side, manufacturing growth decelerated by half to 1.6% in the three months through September from 3.2% in the preceding quarter, mainly reflecting slower growth in vehicle production, it said.
Export volume fell in the third quarter as the volume of agricultural exports dropped because of a high base effect, but also pressure from China–US trade tensions, a decline in domestic aquaculture production, and weaker growth in manufacturing export volume as economic growth slowed in some trade partners and tensions rose over protectionist trade measures.
Thailand's economy expanded by 4.3% in the first nine months this year, supported by robust private consumption and investment. Private consumption was helped by improved farm incomes, consistently low inflation and interest rates, and measures to support low-income groups.
Private investment was supported by accelerated construction and purchases of machinery and equipment.
Growth in hotels and restaurants weakened as tourist arrivals from mainland China and Russia fell.
"The growth forecast for 2019 is likewise pared to 4.1% in response to a weaker global environment, even as domestic demand is expected to remain robust," the ADB said.
In September the bank projected the Thai economy would expand 4.3% in 2019.
"The forecast dip in sub-regional growth in 2018 is retained, but now growth is expected to remain at 5.1% in 2019 in light of downward revisions for Indonesia, Laos, Malaysia, and Thailand," said the ADB.
"The pace of growth has been maintained since the release of the September update, but some downside risks for individual Southeast Asian economies have intensified."
Robust domestic demand continued to drive growth in Southeast Asia.
Infrastructure spending remained strong in Brunei, Indonesia, the Philippines, and Thailand, but declined in Malaysia.
Consumption was buoyant despite rising food and transport prices in some economies. Moderation in global demand for exports is, however, dampening growth prospects for the sub-region, and particularly for Malaysia and Thailand, in 2018 and 2019, the ADB said.
While the US-Sino tariff truce was a welcome development, ADB chief economist Yasuyuki Sawada was quoted by Reuters as saying "the unresolved conflict remains the key downside risk to economic prospects in the region".
Earlier this month, US President Donald Trump and Chinese counterpart Xi Jinping agreed to a 90-day truce on further tariffs as they try to negotiate a deal.
The ADB also kept its 6.6% and 6.3% growth projections for China, as well as its 7.3% and 7.6% growth expectations for India for both years.
Easing commodity prices and central bank policy actions could cause the pace of inflation in developing Asia to settle at 2.6% this year and 2.7% in 2019, the ADB said.