Thai economic growth slows in Q3 on subdued domestic demand

Thailand’s economic growth slowed in the September quarter, thanks to widespread deceleration in domestic demand. The country’s GDP growth eased to 3.2 percent year-on-year from second quarter’s 3.5 percent. On a quarter-on-quarter basis, the economic growth decelerated to 0.6 percent seasonally adjusted, whereas the second quarter growth was downwardly revised to 0.7 percent.

Private consumption also grew at a moderate pace of 3.5 percent in the September quarter, as compared with 3.8 percent growth recorded in the second quarter. Government consumption shrank 5.8 percent year-on-year, reversing the 1.5 percent growth recorded in the second quarter. Investment also continued to decline for the fourth consecutive quarter to 1.4 percent year-on-year in the third quarter. According to the National Economic and Social Development Board (NESDB), the Thai economy is likely to expand 3.2 percent year-on-year, while exports are expected to come in at 0 percent year-on-year, noted ANZ.

The current level of support from government expenditure and net exports still seems insufficient to counter the sluggishness in private sector activity. The Thai government is aware of the weakness in private sector demand. Media reports announced that the government would be offering a personal tax allowance of as much as THB 30,000 for tourism and other spending in late December to stimulate consumption, stated ANZ.

The Bank of Thailand is expected to keep its accommodative stance through 2017. Even if credit growth has began rising in recent months, Thai economic growth is expected to stay below trend, owing to weak private investment and capacity utilization, according to ANZ.