Thailand: GDP growth softens in the third quarter
November 21, 2016
The Thai economy lost speed in the third quarter after GDP increased 3.2% year-on-year. This came in below the 3.5% expansion registered in Q2 and undershot the 3.4% rise the markets had expected. Q3’s reading was the result of stagnant domestic demand, which offset robust contribution from the external sector.
Domestic demand was flat in Q3, as private consumption and fixed investment weakened and government consumption recorded a sharp contraction. Private consumption expanded 3.5% year-on-year in Q3, a notch lower than the 3.8% increase registered in Q2. Fixed investment grew at the lowest rate since Q3 2015 and came in at 1.4% (Q2: +3.2% year-on-year). Finally, government consumption recorded the sharpest contraction on record and fell 5.8%, which was a severe downswing from Q2’s 1.5% increase and the sharpest drop on record.
On the external side of the economy, exports of goods and services grew 3.6% in Q3, which was a healthy acceleration from the 2.0% expansion seen in Q2. Conversely, imports decreased 1.3% in Q3 (Q2: -1.6% yoy) and marked the fifth consecutive period of contraction. Due to the increase observed in exports and the further slip in imports, net exports contributed 3.6 percentage points to overall economic growth, up from 2.6 percentage points recorded in Q2.
Sequential data corroborated the increase showed by the annual data as GDP expanded 0.6% in seasonally-adjusted terms in Q3, which marked a slowdown from the 0.7% quarter-on-quarter growth logged in Q2.