Thailand Economic Growth Surges to 5-year High

Singapore’s gross domestic product (GDP) expanded by 4.4% yoy in 1Q18 in line with forecast and faster than 3.6% yoy in 4Q17. From the supply side, the growth was supported by the manufacturing sector, which grew from 4.8% yoy in 4Q17 to 9.8% in 1Q18. Growth in construction sector remained in contraction, declining by -5.0% yoy in 1Q18, while services sector rose from 3.5% yoy in 4Q17 to 4.1% in 1Q18. We expect Singapore’s GDP growth to slow from 1Q18, consistent with Singapore’s Ministry of Trade and Industry (MTI) projection, where it is expecting a full-year growth forecast in the range of 2.5% to 3.5% this year. On an annualised and seasonally adjusted basis, Singapore’s economy grew by 1.7% qoq in 1Q18, from 2.1% qoq in the previous quarter.

In Thailand, the country’s economic growth surged to a five-year high in 1Q18, expanding by 4.8% yoy, against Bloomberg median consensus forecast at 4.0% yoy. This was the highest GDP growth since first quarter 2013, supported by steady global economic growth, which is providing a positive impetus to the Thailand’s exports and tourism industry. Private consumption grew from 3.4% yoy in 4Q17 to 3.6% in 1Q18, while gross fixed capital formation surged from 0.2% to 3.4% during the same period. From the supply side, Thailand’s economy rose above expectation in the first quarter in agriculture sector, which rebounded from -1.3% yoy in 4Q17 to 6.5% in 1Q18 and the growth in the manufacturing sector, from 3.4% yoy in 4Q17 to 3.7% in 1Q18.

At the same time, Thailand exports rebounded to double digit growth in April, from 7.1% yoy in March 2018 to 12.3% in April, while imports accelerated from 9.5% yoy to 20.4% in the same period. The strong export growth was due to the strong demand for manufacturing products, which grew from 7.7% yoy in March to 12.2% in April. On the other hand, growth in agriculture sector rebounded from -9.7% yoy in March to 14.9% in April. However, with strong growth of imports, Thailand’s trade balance for the month stood at a deficit of USD1.28bn, as compared to the positive trade balance at USD1.27bn in the previous month.

On the inflation front, Singapore’s headline inflation rate fell to 0.1% in April compared to 0.2% recorded in March, according to the Monetary Authority of Singapore (MAS). The drop was due to smaller increases in the prices of retail items, electricity and gas, and a "steeper fall" in the cost of private road transport, said the authorities.

Source: Affin Hwang Research - 25 May 2018