The Thai economy grew at the slowest pace in 17 quarters of 2.8 percent p.a. in 1Q19, lower than the consensus estimate at 3.2 percent, dampened by shrinking exports amid a steady slowdown in the global economy and impacts of the trade war. However, domestic spending and private investment overall continued to support the Thai economy. It is expected that such a growth momentum will continue into 2Q19, buoyed by household spending as a result of mid-year economic stimuli, though close attention must be paid to drought, which may last until July, thus hurting farm income during this quarter.
Looking into 2H19, the Thai economy will continue to be plagued by numerous downside risks. These include the US-China trade war that may result in greater protectionism and this will likely spell trouble for global trade. In addition, 2019 Thai exports overall may grow slower than the current projection of 3.2 percent, or within 2.5-3.5 percent, while there are domestic issues that need to be monitored, including the formation of a new government, a policy statement of the new Cabinet and their efforts to push forward the FY 2020 budget because such factors will likely affect sentiment towards the Thai economy, going forward. Given this, we at KResearch have decided to maintain our 2019 growth forecast for the Thai economy at 3.7 percent pending an assessment on internal and external risks. If such risks are prolonged, the Thai GDP growth may lean towards the lower end of our projection band of 3.2-3.9 percent in 2019.