Thai economic growth slips to 5-year low

18 February, 2020 12:00 AM printer

BANGKOK: Thailand’s economy grew at its weakest pace in five years in 2019 as exports and public investments slowed, adding pressure on the central bank to cut rates to shield Southeast Asia’s second-largest economy from the coronavirus epidemic.

The trade-dependent economy has been buffeted by the Sino-US trade war, soft domestic demand and a delayed fiscal budget and drought, but tourism stood out as a bright spot, report agencies.

Many analysts now expect the Bank of Thailand to further slash rates at record lows to bolster growth this year.

Gross domestic product expanded 1.6 per cent in the October-December quarter from a year earlier, versus 2.1 per cent forecast in a Reuters poll and the third quarter’s upwardly revised 2.6 per cent growth.

In 2019, the economy grew 2.4 per cent, the slowest rate since 2014. It was in line with analysts’ forecast, but was sharply down from upwardly revised 4.2 per cent growth the previous year.

“The Q4 data was disappointing as the trade war weighed on exports and investments whilst the lagged effect of the government formation and budget bill approval sapped fiscal expansion,” said Kobsidthi Silpachai, head of capital markets research at Kasikornbank.

On a quarterly basis, the economy grew 0.2 per cent in the October-December quarter, the National Economic and Social Development Council (NESDC) said, in line with upwardly revised 0.2 per cent growth in July-September.

The state planning agency on Monday (Feb 17) cut its forecasts for 2020 economic growth to 1.5-2.5 per cent from 2.7-3.7 per cent. It also lowered its outlook for exports, the main growth driver, to a 1.4 per cent rise from a 2.3 per cent increase projected in November.

First-quarter GDP may contract from the previous three months before recovering in the second quarter as tourism should recover, Wichayayuth Boonchit, the NESDC’s deputy secretary general, told a news conference.