Lower 2019 forecast for Thailand GDP

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A BTS or skytrain moving above the street approaches the station in Bangkok,
FEBRUARY 19, 2019 - 3:55 PM

On the back of increased risks to exports and government consumption and investment not accelerating as much as expected, Citi Research is lowering its 2019 and 2020 forecasts for Thailand from 4.0 to 3.8 and 3.9 to 3.8 respectively, said analyst Nalin Chutchotitham in a report on Monday. 

While domestic demand and tourism has so far pointed to stable growth, prolonged export weakness does not bode well for related services and income growth, noted Ms Chutchotitham. She added that they continue to expect the Bank of Thailand to hold off further policy rate hikes until 2020.  

"The surprisingly hawkish monetary policy committee (MPC) votes on Feb 6 has to be monitored, but we think the recent fast-pace appreciation of the THB would likely deter the Bank of Thailand from sending more hawkish signals," she added. In February this year, two MPC members voted for a second straight hike in policy rates. The MPC had, in December, voted 5:2 to hike 25 basis points.

Thailand's Q4 GDP came in at 3.7 per cent year-on-year, higher than market expectations of 3.6 per cent and the previous quarter's 3.3 per cent. The main support for growth came from stronger-than-expected private consumption (5.3 per cent year-on-year versus 5.2 per cent in Q3) and private investment (5.5 per cent year-on-year versus 3.8 per cent in Q3). 

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