Thailand’s 2019 Economic Outlook, Expecting a Favorable Pace of GDP Growth at 3.5-4.5%

The Office of the National Economic and Social Development Council (NESDC) has reported that the Thai economy in the fourth quarter of 2018 expanded by 3.7% YoY, accelerated from 3.2% in the previous quarter. After seasonally adjusted, the economy grew by 0.8% from the third quarter.

In 2018, the Thai economy expanded by 4.1%, up from 4.0% in 2017 and was recorded as the fastest expansion in six years. Export value grew by 7.7% while private consumption and total investment grew by 4.6% and 3.8%, respectively. Headline inflation averaged at 1.1% and the current account recorded a surplus of 7.4% of GDP.

International reserve at the end of December 2018 stood at 205.6 billion US dollars (excluding net forward position of 33.7 billion US dollars), which was equivalent to 3.3 times of short-term foreign debt, equivalent to an import value of 10.6 months (given the average of import value in the fourth quarter of 2018).

 

2019 Economic Outlook
The Thai economy in 2019 is inclined to face increased limitations and downside risks posed by global economic and financial volatilities. Under the baseline scenario, it is nevertheless expected that the Thai economy will grow at a favorable pace. The Thai economy in 2019 is projected to grow in the range of 3.5-4.5%, supported by;

1. A favorable growth momentum of private consumption.
2. An improvement of private investment attributed to rising capacity utilization and increased BOI’s investment applications.
3. An acceleration of public investment following progresses of key public infrastructure projects.
4. A recovery of the tourism sector in line with a normalizing trend of tourist numbers and receipts.
5. A clearer redirection of global trade, production, and investment which will help ease the impacts from the global slowdown.

All in all, it is expected that export value will grow by 4.1%, and private consumption and total investment will grow by 4.2 and 5.1%, respectively. Headline inflation is forecasted to be in the range of 0.5-1.5% and the current account will record a surplus of 6.2% of GDP.

 

In January 2019, foreign investors registered a net buy of long-term bond while selling short-term bonds. As a result, government bond yield with short-term maturities continuously increased, and bond yield with long-term maturities declined.

The average value of Thai baht in 2019 is expected to be in the range of 31.5-32.5 baht per US dollar, appreciated from 32.3 baht per US dollar in 2018.

Under the baseline scenario, the world economy and the global trade volume are projected to grow by 3.8% and 3.8%, slowing from 3.9% and 4.0% in 2018, respectively.