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Thailand's economic growth outlook was downgraded further after the economy logged its weakest growth in five years in the second quarter due to subdued domestic demand and exports.
Gross domestic product expanded 2.3 percent year-on-year in the second quarter, slower than the 2.8 percent increase seen in the first quarter, the National Economic and Social Development Council said Monday.
This was the weakest growth since the third quarter of 2014, but in line with expectations.
On a quarterly basis, the economy grew 0.6 percent in the second quarter after rising 1 percent in the preceding period.
The agency downgraded its overall growth outlook for 2019 to 2.7 percent - 3.2 percent from 3.3 percent - 3.8 percent estimated in May. Exports are forecast to shrink 1.2 percent instead of 2.2 percent growth projected previously.
While favorable base effects and imminent fiscal and monetary stimulus may help provide some recovery in the third and the fourth quarters of the year, it is going to be tough for the economy to outperform the 3 percent new normal for GDP growth this year, Prakash Sakpal, an ING economist said.
Gareth Leather, an economist at Capital Economics, said with weak global demand and a downturn in the tourism sector likely to drag on growth prospects over the coming quarters, the economy is expected to remain weak.
Even the downwardly revised official growth forecast is too optimistic, the Leather noted.
The expenditure-side breakdown of GDP showed that private spending rose 4.4 percent annually in the second quarter following 4.9 percent increase in the first quarter.
Government final consumption growth eased to 1.1 percent from 3.4 percent. At the same time, domestic investment gained 2.0 percent versus 3.2 percent increase in the first quarter.
For the external sector, exports and imports of goods and services decreased 6.1 percent and 2.7 percent, respectively. The stronger currency and US-China trade conflicts dampened shipments.
