Thailand’s economy grew at a slower pace last quarter on weaker private investment, putting pressure on the government to boost spending to help shield the economy from rising global risks and political uncertainty following the death of King Bhumibol Adulyadej.
GDP expanded 3.2 percent from a year earlier, the National Economic and Social Development Board (NESDB) said in Bangkok on Monday. The median estimate of 25 economists surveyed by Bloomberg was 3.4 percent. GDP grew 0.6 percent from the previous three months, compared with the 0.7 percent median estimate.
Big picture
Thailand’s economy has struggled to gain traction this year as weak consumer spending and a slump in trade curbed investment. While exports are showing some signs of recovery, authorities are now facing risks from financial market volatility following the US elections and the death last month of the Thai king, who has served as a pillar of stability during his seven-decade rule. While the military junta, led by Prime Minister Prayuth Chan-Ocha, has pledged to boost infrastructure projects and give financial support to farmers, that hasn’t been enough to support the economy, with government consumption contracting last quarter.
Economist takeaways
Growth “looks set to soften further over the coming quarters, due to high levels of household debt, lackluster global growth and continued political uncertainty,” Krystal Tan, an economist at Capital Economics Ltd. in Singapore, said in a note. “The passing of Thailand’s king will probably cause some disruption to economic activity in the short term, though the impact should be fairly modest and concentrated in certain sectors of the economy, notably nightclubs and other entertainment venues.” “We expect GDP growth to remain below potential, which should keep the central bank accommodative through 2017,” Weiwen Ng, an economist at Australia & New Zealand Banking Group Ltd. in Singapore, said in an e-mail. “While credit growth has started to edge up in recent months, the inability of private investment and capacity utilization to rise will keep economic growth below trend.”
Other details
Private consumption rose 3.5 percent in the third quarter from a year ago, down from 3.8 percent in the second quarter. Government spending contracted 5.8 percent, compared with 1.5-percent expansion in the previous quarter; growth in state investment slowed to 6.3 percent, from 11.9 percent. Private investment declined 0.5 percent, compared with 0.2-percent expansion in the second quarter. Exports increased 0.4 percent, returning to growth for the first time in seven quarters. NESDB sees growth of 3.2 percent this year and 3 percent to 4 percent in 2017; exports forecast to show zero growth this year, compared with previous estimate of 1.9-percent contraction. Porametee Vimolsiri, secretary-general of the state planning agency, said the economy may slow down slightly in the fourth quarter because of uncertainties in the tourism industry. Government investment will remain the key driver next year, he said.