Thailand’s Q1 GDP came in weaker than the expectations, slowing to 0.3% q/q sa (consensus: -0.6%), a marked deceleration from the downwardly-revised Q4 print of 1.1% q/q sa (previously: 1.7%).On a y/y basis, growth picked up to 3.0%, reflecting a very low base last year when political instability peaked prior to the military coup in May. The weakness in Q1 reflects two main factors:
- 1) continued subdued domestic demand, both in consumption and investment, which is linked to weak consumer and business confidence.
- 2) weaker-than-expected export growth, weighed by a sharper slowdown in China in particular.
While growth continues to see support from strong tourist inflows (upon which around 1/3 of GDP is reliant) as well as lower oil prices, the protracted sluggishness in domestic demand has led to lower the 2015 growth expectation by 1.3pp, to 3.7%. A heightened risk of further near-term cuts by the BoT following the unexpected back-to-back cuts in March and April, though the risk has diminished somewhat given the recent fall in the THB REER – now down more than 5% since the early March peak, says Barclays.
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