Thailand’s GDP Growth Slowed Last Quarter on Exports Decline

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Thailand's Prime Minister Prayuth Chan-Ocha
Prayuth Chan-Ocha, Thailand's Prime Minister. Photographer: Dario Pignatelli/Bloomberg

Thailand’s economy barely grew last quarter as rising government spending failed to counter falling exports and weakening local demand. The outlook for the rest of the year isn’t that much better.

Gross domestic product rose 0.3 percent in the three months through March from the previous quarter, the National Economic and Social Development Board said in Bangkok Monday. The median of 17 estimates in a Bloomberg survey was for a 0.6 percent contraction. GDP grew 3 percent from a year earlier, compared with a prediction of a 3.4 percent gain.

The agency today cut its forecasts for economic expansion and exports growth this year, and said the second quarter should be better than the first. Prime Minister Prayuth Chan-Ocha has introduced a nano loans program for low-income earners and pledged to increase investment spending to boost consumption and counter weaker overseas sales.

“There has been no sign of a strong economic recovery,” said Benjarong Suwankiri, an economist at TMB Bank Pcl in Bangkok. “Growth will continue to be sluggish, as only the government’s spending has showed signs of picking up, while consumption, investment and exports are still very weak.”

The baht was little changed at 33.47 against the dollar as of 10:23 a.m. in Bangkok. It is the worst performer in the past three months among 11 Asian currencies tracked by Bloomberg.

Easing Scope

The NESDB cut its GDP growth forecast for this year to 3 percent to 4 percent from an earlier prediction of 3.5 percent to 4.5 percent. It lowered its export growth forecast to 0.2 percent from 3.5 percent.

Exports fell for a third month in March, while consumer confidence dropped to a 10-month low in April. If overseas sales contract this year, that would be a record third straight year.

“The weaker baht should have a positive impact on exports from 2Q,” Arkhom Termpittayapaisith, secretary general of the NESDB, said in a briefing. “The second quarter should be better than the first as there are more positive factors. The government is accelerating spending and the weakening baht will also help boost exports.”

The Bank of Thailand unexpectedly cut its key interest rate for a second straight meeting last month. The economy is recovering slower than expected, and exports are subject to greater downside risk, the monetary authority said last week in the minutes of its April 29 policy meeting.

The parliament will begin debate this week on the fiscal 2016 budget, which may see the highest proportion of investment spending in seven years.

“There is scope for further easing from the central bank if activity continues to slide,” said Benjamin Shatil, a Singapore-based analyst at JPMorgan Chase & Co. “Any pickup will hinge on higher government spending and we are cautiously optimistic that this could underpin some stabilization in growth in the second half of the year.”

The NESDB rebased its data and revised GDP data going back to the first quarter of 1993. The economy grew a revised 0.9 percent last year, it said.

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