Thailand’s NESDB Expects Slower Exports and GDP Growth in 2H18

Thailand’s real GDP growth slowed to 4.6% yoy in 2Q18, its slowest growth level since 4Q17, after reaching a five-year high of 4.9% in 1Q18. In the first half of the year, GDP growth expanded by 4.8% yoy (4.2% in 2H17), supported by private consumption. However, growth was weighed down by net exports, which contracted for the second consecutive quarter to -2.8% yoy in 2Q18 (-6.8% in 1Q18). The GDP growth performance in 2Q18 was also dragged by government consumption expenditure and gross domestic expenditure, which had eased to 1.4% yoy and 4.5% yoy, respectively (1.9% and 5.0% in 1Q18). The expansion of private consumption expenditure in 2Q18 at 4.5% was its highest since 1Q13 (3.7% in 1Q18), as well as total investment which rose to 3.6% yoy (3.4% in 1Q18).

On the trade front, following two consecutive months of trade surplus, Thailand’s trade balance declined in July to a deficit of USD516.2mn from a seven-month high of USD1.5bn in June. This was despite the slight improvement in export growth to 8.3% yoy in July (8.2% in June). Imports remained buoyant at 10.5% yoy (10.8% in June), but had eased for the third straight month. Following a robust export expansion of 11.2% in 1H18, Thailand’s National Economic Social Development Board (NESDB) revised its 2018 export growth projection to 10% compared to its previous projection of 8.9% (9.9% in 2017), supported by NESDB’s better 2018 GDP growth projection of 4.2-4.7% (3.9% in 2017). However, it anticipates the Thai economy to slow down going into the second half of the year, due to the higher base in 1H18, as well as lower than expected tourist arrivals and potential negative impact on agricultural production amid flood conditions.

In Singapore, non-oil domestic exports (NODX) rose sharply to 11.8% yoy in July, rebounding from 0.8% in June, but lower than the 15.5% growth registered in May 2018. NODX performance was led mainly by strong growth in pharmaceuticals. Meanwhile, Singapore’s consumer price index (CPI) was steady at 0.6% yoy for the second straight month in July, maintaining its fastest pace since November 2017. The decline in costs of private road transports by 0.2% yoy (+0.4% in June) had managed to outweigh the 12.5% yoy surge in cost of fuel and utilities (6.3% in June), due to the increase in electricity tariffs by an average of 6.9% or 1.50 cents per kWh between 1 July to 30 September 2018, compared to the previous quarter. Higher electricity tariffs had also led to the acceleration of core-CPI, which excludes accommodation and private road transport, for the third consecutive month to 1.9% yoy (1.7% in June), its highest rate since August 2014. For 2018, Monetary Authority of Singapore (MAS) expects headline CPI to settle within the upper half of its 0-1% forecast range meanwhile core-CPI is projected to average in the upper half of the 1-2% forecast range as imported inflation is projected to rise amid the global oil price rally and domestic sources of inflation to be buoyed by wage growth and higher domestic demand.

Source: Affin Hwang Research - 24 Aug 2018