Thailand Economic Outlook 2019 & Update Economic Performance - Q1 2019

2019 Highlights:

• The National Economic and Social Development Board (NESDB) expected the Thai Economy to grow about 3.3%-3.8%, which mainly driven by private and public investments.
• In 2019, the US-China trade dispute continues to put a press on global trade, and this will be critical issues to watch in this year.
  
  
  Source: Kasikorn Research Center

Analysis:

• Global Economy 2019:
  
  Challenges ahead key economies such as the US, Eurozone, Japan, and China are expected to slow down in 2019 due to domestic factors such as the US' high base from fiscal stimulus measures, China's restructuring attempts, and Japan's consumption tax hike from 8% to 10 %.
  
  In addition, the US-China trade war continues in 2019. The ongoing trade war between the US and China has had an impact on Thai exports worth up to US$3.1 billion in 2019. This impact would also affect the country's exports going into 2020 according to research by Kasikorn Research Centre released by Jun 28, 2019.
  
  
  The Fed is expected to cut interest rates during the 2nd half of this year. It contributes to a massive influx of capital flow into Thailand as one of the tops of the "currency safe heaven" list. Thai Baht tends to appreciate about 5% from last year and is projected to stay at 31.20 THB to the US dollar until the end of this year.
  
  
  Source: World Economic Outlook (WEO) as of October, 2018
• Thai Economy 2019:
  The Thai Economy in Q1/2019 expanded by 2.8% YoY, compared with 3.6% in the previous quarter. While seasonally adjusted, the economy grew by 1.0% from the fourth quarter %QOQsa, reported by NESDC as of May 2019.
  
  On the expenditure side, overall growth was mainly driven by continual expansion in private consumption, private investment and the support in the government expenditure. However, the export side declined. On the production side, agriculture, gas, electricity, steam and air conditioning supply sectors accelerated, while wholesale and retail trade, manufacturing, accommodation and food service activities, transportation, and construction sectors softened.
  
  The Thai Economy in 2019 is forecasted to grow about 3.3%-3.8%, supported by the following reasons;
  1) A favorable growth momentum of domestic demand , which includes private consumption, private investment, government spending, and public investment.
  2) During the latter half of the year 2019, export is expected to improve gradually due to the declining inventories in significant economies, more-relaxed conditions on-chip shortage in the world market, and a clearer redirection of global trade.
  3) A recovery of tourism sector
  
  In summary, NESDC estimated the export value would grow by 2.2%, private expenditure, and the total investment will expand by 4.2% and 4.5%, respectively. Inflation is expected to lie in between 0.7%-1.2%; meanwhile, the current account will report a surplus of 5.9% of GDP.
  
  Economic Projection of 2019
  
  Source: NESDC Economomic Report Q1/2019 as of May, 2019
  
  Economic management for the remainder of 2019 would put the priority on;
  1) Fostering export growth to achieve not less than 3.0% by concentrating on reaping benefits and minimizing impacts from trade protection.
  2) Supporting the tourism recovery to reach at least 2.21 trillion baht by
  
  • Continuously providing the importance to the safety of tourist lives and properties
  • Promoting tourism package targeting long-distance tourists and high-income tourists
  • Reducing congestion in the main tourist destinations.
  3) Supporting continual expansion of public investment by expediting the FY2019 government’s and state-owned enterprise’s capital budget disbursement to reach the disbursement rates of not less than 70% and 80%, consecutively. It is also fastening the FY2020 government budget process.
  4) Stimulate private investment by fostering export growth, supporting entrepreneurs affected by the trade protection to move their production base to Thailand, as well as developing the labor force to be ready in term of quantity and quality.
  5) Supporting small farmers, low-income groups and strengthening the SMEs, local enterprises, and local economies.