ANZ trims Thai GDP hopes, on soft exports

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A rubber tapper in southern Thailand’s Surat Thani province. Thailand has agreed to cut natural rubber exports to support prices in H1 2019.
MARCH 04, 2019 - 12:27 PM

ANZ ECONOMISTS’ hopes for Thai economic growth in the first six months have dimmed, mainly on struggles on the export front.

A broad-based weakness, including falls in agriculture and manufacturing volumes, has led Thailand’s exports to under-perform the rest of the region the past three months, noted economists Krystal Tan and Sanjay Mathur in a recent report.

And there are few signs that the situation will improve, with the economists citing not just the impact of a relatively strong baht on low value-added sectors, but also the global electronics slump and an agreement with Indonesia and Malaysia to cut natural rubber output to support prices.

“Thailand’s GDP growth picked up from 3.2 per cenet year on year in Q3 2018 to 3.7 per cent year on year in Q4 2018, but more recent economic data suggest the economy is losing momentum,” they added.

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“Apart from the tourism sector, which is showing signs of recovery, the broader trends in most other indicators are weakening.”

Ms Tan and Mr Mathur have trimmed their expectations for 2019 growth to 3.8 per cent, from 4 per cent before, and now think that a 25-basis-point rate hike from the Bank of Thailand will come in Q4 2019, rather than in the current quarter.

“Our revised forecasts are premised on economic activity regaining momentum in H2,” they said. They will keep an eye on factors such as Chinese economic stabilisation and a pick-up in infrastructure investment, especially the Eastern Economic Corridor development plan.