Thailand Q2 GDP Growth Weakest in Near 5 Years

Thailand's GDP grew by 2.3 percent year-on-year in the second quarter of 2019, following a 2.8 percent expansion in the previous period and below market consensus of 2.4 percent. It was the weakest GDP growth rate since the third quarter 2014 mostly due to decline in exports and as private consumption, government spending, and investment rose at a softer pace.
Nesdb, Thailand l Chusnul Ch Manan | 8/19/2019 9:43:03 AM
On the expenditure side, private consumption increased 4.4 percent, compared to a 4.9 percent expansion in the prior quarter, mainly due to a rise spending in non-durable goods and semi-durable goods, linked to the government's welfare card program for low income earners. By contrast, durable spending fell, namely purchasing vehicles and net services.

Gross fixed capital formation advanced 2.0 percent, softer than 3.2 percent in Q1. Private investment grew 2.2 percent, easing from a 4.4 percent rise in Q1, mainly due to a 2.5 percent expansion of investment on machinery (from 5.1 percent in Q1) and spending on private construction which grew 0.9 percent, easing from 1.8 percent in Q1. Meanwhile, public investment expanded 1.4 percent (vs -0.1 percent Q1), largely due to an increase in construction (5.8 percent vs 4.1 percent).

Also, government spending went up 1.1 percent, decelerating sharply from 3.4 percent in Q1, driven by an increase of 1.0 percent in compensation of employees, lower than 1.7 percent previously along with a 5.0 percent rise of social transfers in kind, the same pace as in Q1. However, purchases from enterprises and abroad dropped 1.1 percent. The net external demand contributed negatively to GDP growth, as exports of goods and services slipped 6.1 percent (the same pace as in Q1) while imports of goods and services fell at a softer 2.7 percent (vs -0.1 percent in Q1).

On the production side, the non-agricultural sector expanded 2.6 percent, slowing from a 2.9 percent expansion in the previous three-month period. Output grew at a softer pace for: wholesale & retail trade (5.9 percent vs 6.8 percent in Q1); transportation & storage (2.5 percent vs 3.5 percent), accommodation & food service activities (3.7 percent vs 4.9 percent); health & social work (3.1 percent vs 3.5 percent), arts, entertainment & recreation (10.4 percent vs 11.6 percent), real estate, renting & business activities (3.1 percent vs 4.7 percent); finance & insurance activities (1.8 percent vs 2.0 percent); public administration & defence (0.4 percent vs 0.9 percent); water supply, sewerage, waste management & remediation activities (2.0 percent vs 4.9 percent), and other service activities (2.3 percent vs 2.5 percent). 

Conversely, manufacturing fell (-0.2 percent vs 0.6 percent in Q1), amid decreases in export-oriented industries such as computer, rubber and plastic product. Also, agriculture shrank 1.1 percent, reversing a 1.7 percent growth in the March quarter, as drought dented output of major crops, namely paddy, pineapple, sugarcane together with a deceleration in production of fruits and maize yields. Meantime, yields of vegetables and rubbers rose similar to production of livestock, namely chicken, hen's egg and swine.

On the other hand, faster growth was seen in electricity, gas & water supply (7.3 percent vs 5.4 percent); information & communication (9.3 percent vs 6.5 percent); construction (3.4 percent vs 3.0 percent). Gains were also registered in and education (1.6 percent vs 1.2 percent in Q1); professional, scientific & technical activities (2.3 percent vs 1.3 percent). In addition, output of mining and quarrying rebounded (6.8 percent vs -0.8 percent). 

In the first half of the year, the economy advanced 2.6 percent compared with the same period of 2018. For 2019, the NESDB revised its economic forecast to 2.7-3.2 percent from 3.3-3.8 percent in May, with exports seen contracting 1.2 percent (from 2.2 percent growth).

Thailand Q2 GDP Growth Weakest in Near 5 Years