Thailand’s economic growth in Q3 declines by 0.4%
Slower Thailand tourism and exports growth for Q3 in 2018 has resulted the country to experience a decline in economic growth, offsetting the increase in private consumption. According to a Reuters poll of 12 economists, the median estimate for Q3’s economic growth is 0.6%, with estimates ranging from 0.2% to 1.1%. As of the third quarter, economists have also forecasted this year’s annual growth at 4.2%. This is 0.4% lower than the median forecast growth rate predicted at the end of the second quarter. Such signs were already seen in the June quarter where gross domestic product increased by 1%, 1.1% lower than the first quarter.
Despite the dismal economic growth in the last quarter, Standard Chartered’s economist Tim Leelahaphan still believes the country’s economy will stay robust and in line with its potential growth rate of approximately 4%.
Slowing Thailand tourism and economy causes dismal economic growth
The two main reasons for the country’s slowing gdp growth is because of lower Thailand tourism and exports growth.
For tourism, the tour boat accident that took place nearby Phuket and killed 47 Chinese visitors had triggered safety concerns and dissuaded other Chinese people to visit Thailand. Additionally, the appreciation of Baht, the dengue outbreak, and the viral video of a Chinese tourist being punched by an airport guard has also damaged Thailand’s image in China. As a result, the Tourism Council of Thailand forecasts Thailand tourism growth to decline, with Chinese arrivals predicted to drop around 0.25–1.9 million in Q4 2018 from the same period last year.
As for exports, as a result of the China-US trade war, exports to China had declined by 14% in September on-year and is likely to remain this way as the trade war gains traction.
Future implications for Thailand economy
However, Thailand economy might change its policy interest rate, as it noted a reduced need for accomodative policy. The policy interest rate is currently set at 1.5%.
The economic growth of Thailand economy is also expected to experience a temporary growth due to political campaign spendings. With the general election expected to be held on May of next year, campaign-related activities and rural spending should give the country a short-term economic growth boost.