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Thai economy posts stellar growth in Q3, again beating expectations

Economic growth again stepped up in the third quarter, expanding a robust 4.3% year-on-year, the quickest acceleration since Q1 2013. The print was chiefly supported by the external sector, which has had a stellar year to date, and a robust agricultural sector; the pace of growth in the latter eased, however, from the previous quarter. The result came in above the second quarter’s revised 3.8% yoy increase (previously reported: +3.7% year-on-year) and market expectations of a softer 3.8% growth rate.

Domestically, private consumption grew a tad faster in the third quarter and was supported by low inflation and interest rates coupled with increased wages (Q3: +3.1% yoy; Q2: +3.0% yoy). Government expenditure also increased at a slightly quicker pace on the back of the government’s efforts to stimulate economic growth and attract private investment (Q3: +2.8% yoy; Q2: +2.6% yoy, previously reported: +2.7% yoy). Fixed investment growth accelerated from a weak showing in the previous quarter (Q3: +1.2% yoy; Q2: +0.4% yoy). This was mainly due to a slower contraction in public investment, as growth in private investment slowed.

The external sector has been performing robustly for most of the year to date. In the third quarter, exports grew 7.4% in Q3, up from a solid 6.0% increase in the previous quarter. The rate of expansion in Q3 was the fastest since Q4 2012. Growth in imports, on the other hand, slowed from a robust 8.2% yoy in Q2 to a more moderate 6.7% yoy in Q3, which might indicate a continuation of lackluster domestic demand. As a result, the external sector’s net contribution to economic growth improved.

Looking ahead, the second-largest economy in ASEAN is expected to grow healthily through year-end and next year. A booming external sector and a recovery in the domestic economy on the back of fiscal stimulus and accommodative monetary policy should buttress growth. With elections set for next year, political risks cloud the horizon, however. Moreover, high household debt is weighing on private consumption and could drag on growth prospects. A slowdown in major trading partners’ economies, rising protectionism and a strong baht could dent the external sector.

The FocusEconomics panel forecasts that the economy will grow 3.5% in 2018, which is unchanged from last month’s estimate. For 2019, the panel projects that the economy will expand 3.4%.

Thailand - Investment Data

2012  2013  2014  2015  2016  
Investment (annual variation in %)10.7  -1.0  -2.2  4.4  2.8  

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Thailand Facts

Bond Yield2.370.0 %Dec 06
Exchange Rate32.570.17 %Dec 06
Stock Market1,694-1.41 %Dec 06

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