Thailand’s economic growth saw an uptick in the first quarter of the year, but there are expectations that the rest of the year may not be as robust. The stronger public demand that boosted growth is likely to be balanced out by weaknesses in other areas of the country’s Gross Domestic Product (GDP).
The GDP rose by 0.7% quarter-on-quarter in Q1, a slight increase from the 0.4% growth in Q4. This growth was slightly more than the consensus forecast of 0.5% but fell short of the 1.2% predicted by Capital Economics. Year-on-year, the GDP growth saw a slight decrease, coming down to 3.1% from the 3.3% in Q4.
A detailed look at the data showed that the 2.0% quarter-on-quarter growth in exports remained a strong point for the Thai economy. In the short term, it is expected that export growth will continue to be solid, as companies rush to ship products to the United States before the possible introduction of product-specific tariffs on electronics.
However, with anticipated slowdowns in growth in both China and the United States, exports from Thailand are expected to weaken later in the year.
According to Capital Economics, "we suspect looser fiscal policy will partly offset the weakness we anticipate in other components of GDP. In contrast to other Asian economies, the budget deficit for the current fiscal year in Thailand is set to widen, to 4.4% of GDP from 3.6% previously."
The overall GDP growth for the year is expected to be 2.8%, slightly more than the 2.5% growth rate recorded last year. With the likelihood of sluggish growth and low inflation, it is anticipated that the Bank of Thailand will further loosen its monetary policy in the coming months.