Thailand’s 2019 GDP expansion weakest in five years

BANGKOK: Thailand’s economy grew at its weakest pace in five years in 2019 as exports and public investments slowed, adding pressure on the central bank to cut rates to shield Southeast Asia’s secondlargest economy from the coronavirus epidemic.

The trade-dependent economy has been buffeted by the Sino-US trade war, soft domestic demand and a delayed fiscal budget and drought, but tourism stood out as a bright spot.

Many analysts now expect the Bank of Thailand to further slash rates at record lows to bolster growth this year.

Gross domestic product (GDP) expanded 1.6% in the OctoberDecember quarter from a year earlier, versus 2.1% forecast in a Reuters poll and the third quarter’s upwardly revised 2.6% growth.

In 2019, the economy grew 2.4%, the slowest rate since 2014. It was in line with analysts’ forecast, but was sharply down from upwardly revised 4.2% growth the previous year.

On a quarterly basis, the economy grew 0.2% in the October-December quarter, the National Economic and Social Development Council (NESDC) said, in line with upwardly revised 0.2% growth in July-September.

Thai stocks were flat and the baht eased slightly in afternoon trade.

The state planning agency yesterday cut its forecasts for 2020 economic growth to 1.5%-2.5% from 2.7%-3.7%. It also lowered its outlook for exports, the main growth driver, to a 1.4% rise from a 2.3% increase projected in November.

First-quarter GDP may contract from the previous three months before recovering in the second quarter as tourism should recover, Wichayayuth Boonchit, NESDC deputy secretary general, told a news conference.

“Q1 may contract but Q2 will improve, so it won’t be a technical recession,“he added.

The Bank of Thailand (BOT) said the economy might expand less than 2% this year.

Don Nakornthab, a senior BOT director, said 2019 GDP and the NESDC’s growth outlook were less than the BOT’s forecasts of 2.5% and 2.8%, respectively. However, the recent rate cut took into account a much weaker-than-expected growth outlook for 2020.

The BOT will closely monitor the outbreak, which is expected to hit the first quarter hard, but the situation will gradually improve after that, Don said, adding that economic growth should be more than 3% in 2021, barring further negative factors.

Separately, the finance ministry said it would closely monitor the situation and was ready to introduce additional measures to help the economy. – Reuters