Thailand Q1 GDP Annual Growth Weakest in Over 4 Years

Thailand's gross domestic product grew by 2.8 percent year-on-year in the first quarter of 2019, following a downwardly revised 3.6 percent expansion in the previous period and below market consensus of 3.0 percent. It was the weakest GDP growth rate since the fourth quarter 2014, as both private consumption and investment rose softer, and net external contributed negatively to GDP growth
Nesdb, Thailand l Chusnul Ch Manan | 5/21/2019 10:19:41 AM
On the expenditure side, private consumption increased 4.6 percent, compared to a 5.4 percent expansion in the prior quarter, mainly due to a rise in non-farm income. Durable spending, in particular spending on personal vehicles increased robustly. Meanwhile, spending on non-durable goods continued to rise, particular on food items and other non-durable goods. On the other hand, spending on semi-durable goods and net services slowed down.

Gross fixed capital formation advanced 3.2 percent, softer than 4.2 percent in Q4. Private investment grew 4.4 percent, easing from a 5.5 percent rise in Q4, mainly due to a 5.5 percent expansion of investment on machinery (from 5.6 percent in Q4). On the other hand, spending on private construction expanded 1.8 percent, easing from 5.1 percent in Q4. Meanwhile, public investment contracted 0.1 percent (the same as in Q4), largely due to a decrease in enterprise investment (-1.4 percent vs 4.7 percent) while government investment rebounded (0.6 percent vs -3.0 percent).

Meanwhile, net external contributed negatively to GDP growth, as exports of goods and services fell 4.9 percent (vs 0.7 percent in Q4) while imports of goods and services dropped at a softer 0.2 percent (vs 5.7 percent in Q4).

Conversely, government spending went up 3.3 percent, compared with 1.4 percent in Q4, attributed mainly to a rise in compensation of employees (1.7 percent) along with social transfer in kind (5.6 percent). Also, purchases from enterprises and abroad consumption of fixed capital rose by 5.6 percent and 1.9 percent, respectively.

On the production side, the non-agricultural sector expanded 3.0 percent, slowing from 4.0 percent expansion in the previous three-month period. Output grew at a softer pace for: manufacturing (0.6 percent vs 3.5 percent in Q4); wholesale and retail trade (6.8 percent vs 7.5 percent); information and communication (6.8 percent vs 6.9 percent); transportation and storage (3.4 percent vs 5.4 percent), accomodation and food service activities (4.9 percent vs 5.3 percent); health and social work (3.9 percent vs 4.3 percent), arts, entertaintment and recreation (11.8 percent vs 12.5 percent), professional, scientific and technical activities (1.2 percent vs 3.4 percent); real estate, renting and business activities (4.7 percent vs 4.9 percent); construction (3.0 percent vs 3.4 percent); other service activities (2.5 percent vs 4.3 percent). On the other hand, faster growth was seen in electricity, gas and water supply (5.4 percent vs 5.0 percent); financial and insurance activities (2.4 percent vs 1.8 percent); and public administration and defence (0.9 percent vs 0.1 percent).

Gains were also registered in water supply, sewerage, waste management and remediation activities (4.9 percent vs 4.5 percent) and education (1.2 percent vs -0.7 percent in Q4). Also, agriculture increased 0.9 percent, accelerating from a 0.7 percent growth in the December quarter, amid higher yields of major crops, namely paddy, cassava, palm oil and rubber. Also, production of livestock such as swine and chicken and eggs increased. By contrast, output of mining and quarrying shrank (-0.9 percent vs -0.7 percent). 

On a quarterly basis, the GDP expanded 1.0 percent in the three months to March, after an upwardly revised 0.9 percent expansion in the previous period and below market consensus of a 1.4 percent growth. It was the second straight quarter of quarterly expansion.

For 2019, the NESDB revised its economic forecast to 3.3-3.8 percent from 3.5-4.5 percent in February, with exports seen up 2.2 percent (from 4.1 percent) and private consumption and total investment to rise 4.2 percent (the same pace as previously estimated) and 4.5 percent (from 5.1 percent), respectively.

Thailand Q1 GDP Annual Growth Weakest in Over 4 Years