Thailand's GDP growth is due on Monday

Thailand's 3Q15 GDP growth is due on Monday and market consensus is looking at an even lower number than the 2.8% recorded in 2Q15. In any case, overall GDP growth is set to come in below 3% this year. Focus is on 2016 and if GDP growth can return to the upper half of 3-4% range. 

"We are among the few who expect GDP growth momentum to have ticked up slightly in 3Q15 (DBS forecast: 3.1%)", says DBS Group Research.

That private sector demand remains poor is no longer a secret. Going by the Bank of Thailand's (BOT) gauges, private consumption and investment have been flat for the best part of the last 3 years. Any improvement seen this year has been marginal at best. It is definitely encouraging that the government seems committed to continue supporting GDP growth. The government's recent string of stimulus measures, including the USD 1.3bn rural subsidies and the extension of the income tax cuts, would help to prevent a further moderation in private consumption growth.

Meanwhile, monetary policy remains accommodative as well, and the BOT is expected to keep rates steady throughout 2016, while continuing to tolerate a weak baht. A stronger recovery in private sector demand is likely to be seen only in 2H16, unless export earnings surprise to the upside and provide an additional boost to GDP growth. Households are still de-leveraging, even if there are some early signs that household loan growth might be bottoming out. For a sustained recovery in private consumption growth, stronger wage growth is necessary. Unfortunately, nominal wage growth is practically zero at present.