Thailand GDP growth came within expectations

Thailand 3Q15 GDP growth came in at 2.9% (YoY). On sequential basis, however, growth momentum accelerated markedly to 4.0% (QoQ, saar) from an average of 1.5% in 1H15. In the past year, sequential GDP growth has averaged 2.8%, pretty much the figure we are likely to see for overall 2015 as well. Breakdown of the data confirms that private sector demand remains weak. 

Private consumption growth was practically unchanged at 1.7% (YoY). Private investment growth plunged 6.6% in 3Q15, its sharpest fall in almost 2 years. There was also no surprise from the supply side. GDP growth continues to be driven mostly by tourism-related (hotels, restaurant and retail) and construction sectors. And given the anticipated negative export growth this year, the manufacturing sector, making up 30% of the economy, has seen practically no growth this year. 

How fast and how significant the recovery in private sector demand will determine which half of the 3-4% range will GDP growth come in next year. At this juncture, a stronger recovery in private sector demand is likely to be seen only in 2H16. Without any boost from export earnings, fiscal policy will continue to be only driver. A close monitoring of the private consumption and investment indexes is warranted going ahead.