Thailand GDP Q4 2019


Thailand: Economic growth slumps to over five-year low in Q4

February 17, 2020

The economy grew at a five-year low of 1.6% year-on-year in the fourth quarter of last year, below market expectations of 2.1%, as U.S.-China trade tensions, soft domestic demand, a delayed government budget and drought all took their toll. On a seasonally-adjusted quarter-on-quarter basis, economic growth was stable at 0.2% in Q4. For the year as a whole, growth fell to a five-year low of 2.4%.

Domestic demand contracted again year-on-year in the quarter, albeit at a softer pace compared to the third quarter. This came amid a contraction in government consumption (Q4: -0.9% year-on-year; Q3: +1.7% year-on-year) that was likely linked to the delayed passing of the government’s budget. Meanwhile, private consumption growth eased to a seven-quarter low of 4.1% (Q3: +4.3% yoy) despite low inflation, loan growth and government stimulus to promote domestic tourism. In addition, fixed investment growth slumped to 0.9% (Q3: +2.7% yoy) due to the delayed passage of the government budget.

On the external front, exports of goods and services plunged 3.6% year-on-year, swinging from a 0.6% increase in the third quarter. However, imports fell an even sharper 8.3% in the fourth quarter, after contracting 5.9% in Q3, and net exports thus still contributed to the headline GDP figure.

This year, economic growth will likely be mild on weak domestic demand. Key downside risks remain on the external front amid lingering global trade tensions, a stronger-than-expected slowdown in China, and the outbreak of the novel coronavirus. Fiscal and monetary policy will likely play an important role in improving the outlook for the Thai economy and the recent passing of the 2020 government budget should provide a boost, while weak growth prospects leave the door open for further monetary policy easing.

Commenting on the outlook for the economy, Prakash Sakpal, Asia economist at ING, stated: “with the coronavirus threatening trade and tourism, it seems as if Thailand is in for a prolonged downturn. […] Or, probably even a recession as quarter-on-quarter (seasonally adjusted) GDP, which barely grew in the last few quarters, could well move into contraction territory over the next couple of quarters.”

Analysts at Goldman Sachs, meanwhile, noted that they “expect growth to remain soft on a sequential basis given the outbreak of Covid-19, which is expected (by GS) to cut tourism revenue by 16% in Q1, the drought, and the delayed implementation of FY20 budget. We do not forecast any further policy rate cuts in our base outlook, but risks are clearly skewed to the dovish side given the downside risks to growth.”

Last month, FocusEconomics Consensus Forecast panelists projected the economy to grow 2.8% in 2020, which was unchanged from last month’s estimate. For 2021, the panel saw the economy expanding 3.3%. A new Consensus Forecast will be published on 25 February, and is likely to see Thailand’s outlook downgraded in light of the coronavirus outbreak.

Author:, Economist

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Thailand GDP Chart

Thailand GDP Q4  2019

Note: Year-on-year changes of GDP in %
Source: Office of National Economic and Social Development Board (NESDB) and FocusEconomics Consensus Forecast.

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