Thailand: Economic activity could shrink by 6.5% this year – UOB

Economist Barnabas Gan at UOB Group noted Thailand’s contraction of the GDP is now seen a tad better to 6.5% (from 7.5%) in the current year.

Key Quotes

“Thailand’s GDP fell 6.4% y/y (+6.5% q/q sa) in 3Q20, beating market estimates for a deeper contraction of 8.8% y/y (+3.9% q/q sa). This is up from the previous quarter which registered a double-digit contraction of 12.2% y/y (-9.7% q.q sa) in 2Q20.”

“The upside surprise can be attributed to the improving global macroeconomic backdrop and government stimulus measures. Given the less-than-expected GDP contraction in 3Q20, the National Economic and Social Development Council raised its full-year GDP forecast to -6.0%, up from an earlier range outlook of between -7.3% and -7.8% in 2020.”

“Across the sectors, government expenditure was the sole growth area, expanding by 3.4% y/y in 3Q20. However, other sectors such as private consumption (-0.6% y/y), exports (-22.6% y/y) and imports (-19.9% y/y) continued to contract further.”

“Encouragingly, Gross Fixed Capital Formation (GFCF) fell by a marginal rate of 2.4% y/y, the smallest contraction in the first three quarters of 2020. In value terms, GFCF rose to THB628 billion in 3Q20, the highest since 4Q19, suggesting that investor confidence is slowly returning.”

“Given the gradual recovery seen in Thailand’s macroeconomic environment, we revise our GDP outlook to -6.5% in 2020, up from a previous estimate of -7.5%. Notwithstanding the uptick, Thailand still remains one of the Asian economies that is very dependent on trade and tourism.”