Thailand lowers full-year growth forecast

BANGKOK •Thailand’s economy grew more slowly than expected in the third quarter, and the government lowered its forecast for full-year growth as the country deals with the impact of the United States-China trade war and a strong currency.

Gross domestic product rose 2.4 per cent from a year ago, the National Economic and Social Development Council (NESDC) said yesterday. This is below the median estimate of 2.7 per cent in a Bloomberg survey of economists. The council cut its 2019 GDP forecast to 2.6 per cent – from an earlier view of 2.7 per cent to 3.2 per cent – and said growth should accelerate to 2.7 per cent to 3.7 per cent next year.

Thailand’s trade-reliant economy has been hit by slumping exports, a surging currency and mixed performance in the tourism sector. The central bank earlier this month cut its benchmark interest rate to a record low and announced measures to slow gains in the baht, which has been the strongest performer in emerging markets over the past year, rising about 9 per cent.

The council’s secretary-general, Mr Thosaporn Sirisumphand, called for more stimulus to supplement a US$10 billion (S$13.6 billion) package the government approved in August. The global slowdown, drought and volatility remain key challenges for the economy, he said.

“We need to use all tools that we have as there are still a lot of risks that we can’t control,” Mr Thosaporn told reporters in Bangkok. “We can’t be complacent.”

While the economy appeared to bottom out in the second quarter – when it grew 2.3 per cent, its slowest pace in nearly five years – the rebound has been more muted than expected, Mr Thosaporn said.

“Baht strength hurt exports and private investment in the third quarter,” he said. “We think the baht strength may continue.”

NO STRONG RECOVERY

The worst is probably now over for the economy, but a strong rebound is unlikely.

MR GARETH LEATHER, an economist at Capital Economics.

“The worst is probably now over for the economy, but a strong rebound is unlikely,” said Mr Gareth Leather, an economist at Capital Economics. “Exports will continue to struggle if… global growth slows further. A high level of household debt will also constrain private consumption growth.”

The NESDC said exports now are expected to shrink by 2 per cent this year, compared with the 1.2 per cent contraction it forecast in August.

BLOOMBERG

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