Economics

Thailand’s economy grew at 2.3%YOY in 2019Q2, lowest in 19Q

Agricultural sector contracted by drought effect while industrial sector’s deteriorated following the export-related production.

Published

8 months ago

September 13, 2019

Economic Intelligence Center Siam Commercial Bank

Thailand’s economic growth in the second quarter of 2019 decelerated at 2.3%YOY, which is the slowest rate in nineteen quarters.

This was significantly due to a drop in exports, both goods and services. For production side, agricultural sector contracted by drought effect while industrial sector’s deteriorated following the export-related production.

EIC assesses 2019 Thailand’s GDP growth would below 3% from global economic slowdown. However, fiscal stimulus packages , which should be approved by the cabinet, are able to positively affect Thailand’s GDP.

Key points

Based on the expenditure approach, exports and tourism pulled down the growth while private consumption progressively expanded.

Export values in real terms dropped 5.8%YOY following a drop of 5.9%YOY in the previous quarter due to the global economic slowdown and higher tensions from U.S.-China trade war. Imports also shrank in real terms of -3.4%YOY, down from the previous quarter, which was at -2.6%YOY, from the reduction of raw material, and intermediate goods import for producing exporting products.
Service exports contracted from the drop in tourists’ number and transportation income, at-7.0%YOY, which was resulted from a slow in foreign tourist numbers, as well as a decline in transportation income, both in terms of transportation and freight.
Private consumption softened, at 4.4%YOY. This was mainly due to the decline in growth of durarable goods, at 5.5%YOY, declined from the expansion of 8.2% YOY in the previous quarter following the drop in auto sales. However, the growth of non-durable, and semi-durable goods accelerated at 3.0%YOY and 4.7%YOY, respectively, compared with the growth at 2.5%YOY and 2.8%YOY in the previous quarter. The continuous growth was supported by economic stimulus through the state welfare cards, valued at THB 13.2 billion.
Private investment growth slowed both in construction and machinary&equipment, at 2.2%YOY, reduced from the rise of 4.4%YOY in the previous quarter. This was due to a decline in machinery&equipment investment used in offices, industries, and automotives. Similarly, construction growth also decelerated from residence construction, mainly in Bangkok and Perimeter including municipal.
Public investment growth was rebounded at 1.4%YOY after shrinking -0.1%YOY from the previous quarter. This was resulted from the continous expansion in public construction, at the accelerated rate of 5.8%YOY from the increase of 4.1%YOY in the previous period. However, the investment in machinery& equipment continuously dipped at -8.5%YOY, partially affected from no airplanes imported by Thai Airways in the second quarter.

Author: Kampon Adireksombat, Ph.D. ,Panundorn Aruneeniramarn and Jirayu Photirat

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Economic Intelligence Center Siam Commercial Bank

EIC or Economic Intelligence Center, a unit of Siam Commercial Bank Public Company Limited, is established to provide business executives with valuable insights for effective decision making.