November 15, 2019 / 9:44 AM / 22 days ago

Thai third-quarter GDP growth to slow further as export downturn deepens: Reuters Poll

BANGKOK (Reuters) - Thailand’s economic growth likely slowed in July-September from the previous quarter, a Reuters poll showed on Friday, as exports and manufacturing remained weak amid global trade tensions while domestic demand was sluggish.

FILE PHOTO: Workers work at a construction site in central Bangkok, Thailand, September 26, 2016. Picture taken September 26, 2016. REUTERS/Athit Perawongmetha

The economy grew a seasonally-adjusted 0.1% in the third quarter versus the second quarter, according to the poll’s median estimate of 12 economists. That would be the weakest pace since a contraction in 2018’s third quarter.

Gross domestic product (GDP) expanded 0.6% in the June quarter.

Annual growth was forecast at 2.6% in the September quarter, slightly better than the 2.3% pace in the June quarter, which was the weakest in nearly five years. Fourteen analysts gave annual growth forecasts.

“We do not expect a recovery in Q3 GDP growth, as the manufacturing sector was under heavy pressure from a deepening export downturn,” said Nomura economist Charnon Boonnuch in Singapore.

There is a “risk of a technical recession in the fourth quarter” due to a delayed government budget, said Charnon, who predicts third-quarter annual growth of 2.3% and a quarter-on-quarter contraction.

Deputy Prime Minister Somkid Jatusripitak said on Friday third-quarter GDP “may not be good”, and additional stimulus measures will be considered to shore up growth.

The poll’s forecast for full-year 2019 growth was 2.8%, slowing from last year’s 4.1%, the best rate in six years.

Southeast Asia's second-largest economy is heavily reliant on exports, which have been hit by the U.S.-Sino trade war, while the strength of the baht THB=TH, Asia's top performing currency this year, has added to the pressure.

In the third quarter, exports were flat from a year earlier and manufacturing slumped 4.2%, while private consumption growth slowed to 1.4% and private investment contracted 3.4%, central bank data showed.

However, annual public expenditure rose 11.9% in the third quarter and foreign tourist numbers increased 7.2%, helped by last year’s low comparative levels.

In a bid to boost flagging domestic activity, the government in August introduced a big stimulus package.

Last week, the Bank of Thailand (BOT) cut its policy interest rate THCBIR=ECI for the second time in three months, taking it to a record low of 1.25%.

Deputy BOT Governor Mathee Supapongse told Reuters on Wednesday there was still scope to support the economy if needed.

The National Economic and Social Development Council, which compiles GDP data, has forecast full-year 2019 economic growth of 2.7-3.2%, with exports down 1.2%. It may downgrade those forecasts again on Monday.

Additional reporting by Satawasin Staporncharnchai; Editing by Jacqueline Wong

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