Thai second-quarter GDP growth seen weakest in four-and-a-half years as exports tumble: Reuters poll

[snoop1130]

Thai second-quarter GDP growth seen weakest in four-and-a-half years as exports tumble: Reuters poll

By Orathai Sriring

 

FILE PHOTO: Cars pass a Skytrain (Bangkok Mass Transit System) construction site in Bangkok, Thailand May 13, 2018. REUTERS/Soe Zeya Tun

 

BANGKOK (Reuters) - Thailand’s economic growth likely slowed in April-June from the prior three months, with the annual pace the weakest for any quarter in four and a half years, amid cooling global demand and trade tensions, a Reuters poll showed.

 

Exports, a key driver of Thai growth, continued to contract while gains from tourism and domestic activity slowed, and public spending was crimped by the delayed formation of a government after March’s elections.

 

In the poll, the median forecast from 12 economists was 2.4%annual growth, which would be the lowest since the 2014’s last quarter, which was the same. The pace in January-March was 2.8%.

 

For seasonally-adjusted quarterly growth, the median forecast was 0.7% in the second quarter, compared with the first quarter’s 1.0%.

 

“Weaker external demand started to filter down to domestic demand,” said Sarun Sunansathaporn, economist of Bank of Ayudhya, who predicts second quarter annual growth of 2.1%.

 

Charnoon Boonnuch, a Nomura economist in Singapore, said the economy “remains vulnerable to any escalation of U.S.-China trade tensions and a risk from an intensifying drought”.

 

The poll’s forecast for full-year 2019 growth was 3.0%, slowing from last year’s 4.1%, the best rate in six years.

 

Southeast Asia’s second-largest economy is heavily reliant on tourism, and arrivals increased only 1.1% in the second quarter. Visitors from China, the biggest source, declined.

 

In the second quarter, exports declined 4.2% from a year earlier. Putting pressure on exports, in addition to the trade war, is the strong baht THB=TH. Due to inflows, it has strengthened 5.5% against the dollar this year, making it Asia's top performer.

 

In a bid to boost flagging growth, the government will introduce a big stimulus package later this month, Finance Minister Uttama Savanayana has said.

 

Last week, the central bank also unexpectedly cut its key interest rate THCBIR=ECI for the first time since April 2015, saying growth could miss its forecast this year. Most economists expect more policy easing later this year.

 

The National Economic and Social Development Council, which compiles GDP data, has forecast economic growth of 3.3%-3.8% this year, with exports up 2.2%. It is expected to downgrade those forecasts again on Monday.

 

Second-quarter private investment fell 2.8% from a year earlier while consumption growth slowed to 3.3%, central bank indices showed.

 

-- © Copyright Reuters 2019-08-15

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[sweatalot]

56 minutes ago, snoop1130 said:

the weakest for any quarter in four and a half years, amid cooling global demand and trade tensions

they forgot to mention the far to expensive Baht

[mok199]

Millionaires on the way ,the strongest currency in the universe, tourism booming with Chinese and indians, new 5 Star hotels, land prices up 18%, new malls and condos getting built......Their spin is getting confusing

[FarFlungFalang]

Most of any stimulus will get siphoned off to stimulate various offshore accounts and not do much stimulating in Thailand then in true Thai style the poor will spend the next decade working their <deleted> off to get the economy running again just in time to start the process all over again.

[Just1Voice]

Starts out soft and low, like a small earthquake, and when it lets go, half the country shakes....

 

My apologies to Neal Diamond, but a crash is coming. 

[overherebc]

So China exports a lot of finished goods to the USA using bits and pieces bought from Thailand. Baht gets stronger so the bits and pieces from Thailand get expensive so China looks elsewhere for cheaper bits and pieces to help with pricing on exported goods. ( quality? who cares? )

Thailand's exports drop.

Who can fix it?

[keemapoot]

2 minutes ago, overherebc said:

So China exports a lot of finished goods to the USA using bits and pieces bought from Thailand. Baht gets stronger so the bits and pieces from Thailand get expensive so China looks elsewhere for cheaper bits and pieces to help with pricing on exported goods. ( quality? who cares? )

Thailand's exports drop.

Who can fix it?

Basically correct. With an export-driven economy, the biggest curse is a strong Baht. And, as you correctly stated, the component parts or raw materials that go into the Chinese exports are already high priced, so that the China-US trade war makes these components untenable.

 

The glory days are over if this trade war persists.

[overherebc]

14 minutes ago, keemapoot said:

Basically correct. With an export-driven economy, the biggest curse is a strong Baht. And, as you correctly stated, the component parts or raw materials that go into the Chinese exports are already high priced, so that the China-US trade war makes these components untenable.

 

The glory days are over if this trade war persists.

I know it's just one small part of the equation. That statement is just to let the 'financial experts' know that I'm in no way a financial expert' before they start quoting %'s of this market, that market blah blah blah.

I just work on the principle if I can find something cheaper that does the same job then that's the one I'll buy. ????????

[keemapoot]

13 minutes ago, overherebc said:

I know it's just one small part of the equation. That statement is just to let the 'financial experts' know that I'm in no way a financial expert' before they start quoting %'s of this market, that market blah blah blah.

I just work on the principle if I can find something cheaper that does the same job then that's the one I'll buy. ????????

Common sense goes further than expertise often. But from someone who has been involved in very large export trading business all my life you have the basic elements covered. Thailand is a supplier to China for raw materials or components that then get sold onward to the US.

 

Transactions are usually (read always)  denominated in dollars. Finished products go to America. Export transactions and international documentary letters of credit are always denominated in dollars. 

 

Do the math. Higher costs from Thailand because of its high Baht value means Chinese producers will look elsewhere or seek to denominate transactions in Yuan. Thailand loses.

[sammieuk1]

All this bad news and hardly a satang lost off the baht need to import Boris for half a day speech and it will be toast????

[hotchilli]

14 hours ago, mok199 said:

Millionaires on the way ,the strongest currency in the universe, tourism booming with Chinese and indians, new 5 Star hotels, land prices up 18%, new malls and condos getting built......Their spin is getting confusing

The spin will change to a downward spiral.. then see what B.O.T says!

[heybuz]

No Thai rice in my local supermarket at home all Pakistani,was Thai at one stage.

[JonnyF]

The drought in Issan won't help. I was up there last weekend and thousands of rai of rice paddy near us had simply withered away. It's going to be a terrible crop and rice is obviously one of the main exports.

 

In other news, I'm surprised Reuters didn't try to blame it in on Brexit.

 

 

[Creasy]

The shine is slowly but surely wearing off Thailand.

[Srikcir]

17 hours ago, snoop1130 said:

The poll’s forecast for full-year 2019 growth was 3.0%

Obviously, no longer relevant:

17 hours ago, snoop1130 said:

The pace in January-March was 2.8%.

 

17 hours ago, snoop1130 said:

Sarun Sunansathaporn, economist of Bank of Ayudhya, who predicts second quarter annual growth of 2.1%.

If the 3^rd and 4^th quarters growth rates were equal, both would have to achieve a 3.45% quarterly growth rate when added to the first and second quarter growth rates to provide for an annual average 3.0% growth rate for 2019. But we already know a growth rate greater than 3% for the remaining quarters is not reality.

More likely the annual growth rate for 2019 will be at best no more than 2.5% and at worst 2%.

[Srikcir]

3 minutes ago, JonnyF said:

It's going to be a terrible crop

Anyone take the de facto free government rice crop insurance?

Drought is one of the main qualifiers for compensation of loss.

[Eric Loh]

For those who are on ground zero like me, last few months business have been brutal and the next remaining months of the year doesn’t looks to be any better. I have meet the challenges of the ‘08 financial crisis and the ‘10 big flood which flooded my factory and still able to keep myself afloat. This time things are different and seem a perfect storm. A global downturn and a incompetent government lead by a unqualified PM. I doubt we have reached bottom and Thailand will continue to spiral downwards unless the elites realized that they too are hurt and decide to change the government and the Generals.  

[carabaothai]

and the bath is stronger this morning ????????????

[Cadbury]

8 minutes ago, Creasy said:

The shine is slowly but surely wearing off Thailand.

So much so there is a flood of smart Thai investment money going into Vietnam. 

https://english.vietnamnet.vn/fms/business/200935/thai--investment-wave--in-vietnam-getting-stronger.html

[TPI]

Does it really matter? It all hinges on the high price of the baht. So long as the military can buy from the US and squirrel its ill gotten gains overseas then it will continue forever! When have the Hi-So's in the LoS ever thought of the masses? "Rice in the field and fish in the river etc..." ????

[RichardColeman]

If anyone really believes Thai exports are in +% anything I think they are deluded.

Currency manipulation - maybe not

Export growth Data manipulation - maybe

[neeray]

Interesting timing, perhaps coincidental that the weak growth started four-and-ahalf years ago. 

 

Get it?

[Tropposurfer]

I got no clue as the world economy but my gut says it ain’t in a good place.

goad I got a job in a field that hopefully won’t get funding cut if things go further south.

[BuckBee]

down turn is in varying sectors and lot of it not directly related to trade war .

incompetence for last 5yrs paying a big part as is pretending tourism doing better than really is .

Trouble is they done nothing on issues of corruption, flooding, exports, baht rate, tourism over last few years and it all coming together under harder current times in a big wammy hit .
2020 trade war will hit even harder and strong baht, water management and government competence and stability mean they loose out to likes of vietnam and cambodia which far better option in export and manufacture plus they taking lot of the tourism and expats as it becoming popular and easy on regulations for most needs from longer tourism to business .

They will be too busy fighting with themselves and grabbing last chances of graft wealth to realise the country be much like the mekong lol .
 

[Fred white]

12 hours ago, TPI said:

Does it really matter? It all hinges on the high price of the baht. So long as the military can buy from the US and squirrel its ill gotten gains overseas then it will continue forever! When have the Hi-So's in the LoS ever thought of the masses? "Rice in the field and fish in the river etc..." ????

Rice in the field fish in the river isn't that one of the things King Rama ix promoted for self sustainability

[Soikhaonoiken]

On 8/15/2019 at 1:21 PM, sweatalot said:

they forgot to mention the far to expensive Baht

They won't or don't want to admit the strong Baht is affecting their own GDP.