2019.02.1805:49:00UTC+00Thailand 2018 GDP Growth Fastest In 6 Years

Thailand's economy expanded at the fastest pace six years in 2018, driven by stronger domestic demand that offset slowing export growth, but the momentum is likely to lose steam due to a general election and a sluggish global economy.

Gross domestic product grew 4.1 percent in 2018, after a 4 percent expansion in the previous year, the National Economic and Social Development Council said Monday. Both private consumption and investment grew at the fastest pace in six years, up 4.6 percent and 3.9 percent, respectively. On the other hand, export growth eased to 7.7 percent from 9.8 percent. Imports rose 14.3 percent, after a 13.2-percent increase in 2017.

On the production side, manufacturing growth at 3 percent was the strongest among main categories. Growth in the wholesale and retail trade sector and the hotel and restaurants industry exceeded 7 percent. In the fourth quarter of 2018, the Thai economy grew 3.7 percent year-on-year following a 3.2 percent expansion in the third quarter. GDP rose 0.8 percent from the previous quarter. The NESDC projected growth of 3.5 - 4.5 percent for 2019. The agency expects growth to be underpinned by continued strong growth in private consumption, investment, a recovery of tourism sector, and a clearer direction in global economy. Export growth was forecast to slow further to 4.1 percent. The agency forecast headline inflation in the range of 0.5 -1.5 percent and the current account surplus of 6.2 percent of GDP. "The balance of risks is tipped downward in view of an ongoing overhang of increasing global trade restrictions on exports and elevated political uncertainty domestically," ING economist Prakash Sakpal said.

The economist maintained the 2019 growth forecast of 3.8 percent and expects no more policy moves from the central bank this year. The Bank of Thailand left the key interest rate unchanged at 1.75 percent in February, after raising it in December for the first time in over seven years, citing future risks to financial stability. In December, the central bank lowered the growth projections for 2018 and 2019 to 4.2 percent and 4 percent, respectively.