Thailand: Economic growth moderates to near five-year low in Q1
May 21, 2019
Economic growth decelerated to 2.8% year-on-year in the first quarter of 2019, down from the 3.6% annual expansion logged in Q4 last year and the lowest reading in nearly half a decade. Growth on a quarter-on-quarter basis, however, edged up to 1.0% in Q1, from Q4’s 0.9%.
Household expenditure growth eased to 4.6% (Q4: +5.4% year-on-year) despite still-muted inflationary pressure, growing incomes, low unemployment and personal credit growth. Fixed investment growth also eased to 3.2% in the opening quarter of 2019, from Q4 2018’s 4.2% expansion, owing to weaker growth in construction and machinery investment. Government expenditure, meanwhile, expanded 3.3% in Q1 (Q4: +1.4% yoy) on increased wages and social transfers in the run-up to national elections.
The external sector had a poor showing in the first quarter, with both exports and imports of goods and services falling. Exports of goods and services contracted 4.9%, swinging from a 0.7% expansion in the prior quarter, likely due to ongoing trade tensions between the United States and China. Meanwhile, imports of goods and services dropped 0.2%, contrasting a 5.7% increase in Q4. This was chiefly due to a drop in goods imports as services imports rose robustly.
Looking ahead, the economy is expected to continue growing at a robust, albeit more moderate, pace. Government expenditure should provide some stimulus, while private consumption should remain resilient despite high household indebtedness. Key downside risks stem from a more hostile external environment, notably higher trade tensions between the U.S. and China.
Author: Jan Lammersen, Economist