Thailands GDP growth to improve in 2017, despite a temporary softening in 4Q2016

Trump’s trade protectionism policy, if implemented on China, can stall Thailand’s export recovery as Thailand is part of China’s supply chain for exported products to the US

The National Economic and Social Development Board (NESDB) announced Thailand’s 4Q2016 GDP growth figure to be 3.0%YOY (as compared to the same quarter last year) or a 0.4%QOQ increase from last quarter after seasonal adjustment.

As a result, Thai economy in 2016 grew 3.2%YOY.

Analysis

• A short-term setback in the tourism sector held back growth.

Export of services grew 0.4%YOY, down from a high 7.7%YOY growth in the previous quarter. This was in line with the slowdown in hotels and restaurants on the production which only grew 4.8%YOY.

• Consumption weakened and private investment remained flat.

Private consumption in 4Q2016 expanded 2.5%YOY, down from 3.0%YOY in the previous quarter. Spending on durables reverted to a negative growth territory after an acceleration in earlier periods. In particular, spending on vehicle contracted 9.8%YOY. Meanwhile, private investment has not recovered, falling 0.4%YOY.

Investment in manufacturing sector remained weak. Construction of industrial factories largely shrank by 11.2%YOY while investment in machinery and equipment fell by 0.4%YOY. Nonetheless, investment in residential construction slightly expanded by 1.9%YOY. This reflected the private sector’s low confidence on the economy overall.

• The come back of the export sector shored up the Thai economy.

Thai exports in 4Q2016 steadily recovered with 1.4%YOY growth, the highest growth over the past 2 years. The export outlook looks promising especially for products whose prices are trending up along with oil prices.

Source: https://www.thailand-business-news.com/economics/56469-thailands-gdp-growth-2017-improve-despite-temporary-softening-4q2016.html