Thai economy grows better than expected, but election looms

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Thai Economy Grows Better Than Expected, But Election LoomsThailand’s economy grew fastest in six years in 2018, with fourth-quarter beating expectations on higher domestic demand and record tourism arrivals. GDP rose 3.7 per cent from a year ago, up from a revised 3.2 per cent in the third quarter, the National Economic and Social Development Council said on February 18.

For the full year, the agency put 2018 growth at 4.1 per cent, the highest since 2012 and maintained the 3.5-4.5 per cent economic growth projection it made in November.

However, the government lowered its 2019 export growth outlook to 4.1 per cent from 4.6 per cent. Thailand’s exports, worth about two-thirds of economy, increased 7.7 per cent in 2018, slowing from 2017’s rise of about ten per cent.

The released growth data is the last before Thailand holds an election on March 24 – the first since a 2014 military coup – that might cause political uncertainty.

“It is too early to revise forecasts given the plethora of variables that can impact estimates, for example China-US trade tensions, Brexit and Thai general elections and what economic and social policies will be pursued,” said Kobsidthi Silpachai, head of capital markets research of Kasikornbank.

Headline growth in Thailand’s trade-driven economy has picked up in recent years on global economic recovery. But it is still not firing on all cylinders, with substantial excess industrial capacity.

Growth remains heavily reliant on exports in the face of the US-China trade tensions, while a recovery in private consumption has been constrained by high household debt.

In the 2018’s last three months, tourist arrivals rose 4.3 per cent from a year earlier, up for 1.9 per cent the previous quarter, as the number of Chinese visitors – reduced by a July boat accident that killed 47 – rebounded.

With inflation low, most analysts expect the Bank of Thailand to keep its policy rate unchanged for now after December’s rate hike, but some predict further tightening when the central bank reviews policy on March 20.

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Reading Time: 2 minutes

Thailand’s economy grew fastest in six years in 2018, with fourth-quarter beating expectations on higher domestic demand and record tourism arrivals. GDP rose 3.7 per cent from a year ago, up from a revised 3.2 per cent in the third quarter, the National Economic and Social Development Council said on February 18.

Reading Time: 2 minutes

Thai Economy Grows Better Than Expected, But Election LoomsThailand’s economy grew fastest in six years in 2018, with fourth-quarter beating expectations on higher domestic demand and record tourism arrivals. GDP rose 3.7 per cent from a year ago, up from a revised 3.2 per cent in the third quarter, the National Economic and Social Development Council said on February 18.

For the full year, the agency put 2018 growth at 4.1 per cent, the highest since 2012 and maintained the 3.5-4.5 per cent economic growth projection it made in November.

However, the government lowered its 2019 export growth outlook to 4.1 per cent from 4.6 per cent. Thailand’s exports, worth about two-thirds of economy, increased 7.7 per cent in 2018, slowing from 2017’s rise of about ten per cent.

The released growth data is the last before Thailand holds an election on March 24 – the first since a 2014 military coup – that might cause political uncertainty.

“It is too early to revise forecasts given the plethora of variables that can impact estimates, for example China-US trade tensions, Brexit and Thai general elections and what economic and social policies will be pursued,” said Kobsidthi Silpachai, head of capital markets research of Kasikornbank.

Headline growth in Thailand’s trade-driven economy has picked up in recent years on global economic recovery. But it is still not firing on all cylinders, with substantial excess industrial capacity.

Growth remains heavily reliant on exports in the face of the US-China trade tensions, while a recovery in private consumption has been constrained by high household debt.

In the 2018’s last three months, tourist arrivals rose 4.3 per cent from a year earlier, up for 1.9 per cent the previous quarter, as the number of Chinese visitors – reduced by a July boat accident that killed 47 – rebounded.

With inflation low, most analysts expect the Bank of Thailand to keep its policy rate unchanged for now after December’s rate hike, but some predict further tightening when the central bank reviews policy on March 20.

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