BANGKOK (REUTERS) - Thailand's economy grew at its weakest pace in five years in 2019 as exports and public investments slowed, adding pressure on the central bank to cut rates to shield South-east Asia's second-largest economy from the coronavirus epidemic.
The state planning agency on Monday (Feb 17) also cut its forecasts for 2020 economic growth to 1.5-2.5 per cent from 2.7 per cent-3.7 per cent. It also lowered its outlook for exports, the main growth driver, to a 1.4 per cent rise from a 2.3 per cent increase projected in November.
First-quarter GDP may contract from the previous three months before recovering in the second quarter as tourism should recover, Wichayayuth Boonchit, the deputy secretary general of the National Economic and Social Development Council (NESDC), told a news conference.
"Q1 may contract but Q2 will improve, so it won't be a technical recession," he added.
This year, the NESDC expects foreign tourist numbers to fall to 37 million from last year's record 39.8 million, due to the virus outbreak. The Tourism Authority of Thailand has said the loss in revenue could be as much as 500 billion baht (S$22.3 billion).
The trade-dependent economy has been buffeted by the US-China trade war, soft domestic demand and a delayed fiscal budget and drought, but tourism had stood out as a bright spot.
Many analysts now expect the Bank of Thailand (BOT) to further slash rates at record lows to bolster growth this year.
Gross domestic product expanded 1.6 per cent in the October-December quarter from a year earlier, versus 2.1 per cent forecast in a Reuters poll and the third quarter's upwardly revised 2.6 per cent growth.
In 2019, the economy grew 2.4 per cent, the slowest rate since 2014. It was in line with analysts' forecast, but was sharply down from upwardly revised 4.2 per cent growth the previous year.
"The Q4 data was disappointing as the trade war weighed on exports and investments whilst the lagged effect of the government formation and budget bill approval sapped fiscal expansion," said Kobsidthi Silpachai, head of capital markets research at Kasikornbank.
On a quarterly basis, the economy grew 0.2 per cent in the October-December quarter, the NESDC said, in line with upwardly revised 0.2 per cent growth in July-September.
Thai stocks and the baht were unchanged after the data, with traders saying the outcome was factored in.
The BOT said the economy might expand less than 2 per cent this year. Earlier this month, it cut its policy rate to a record low of 1.0 per cent, and Governor Veerathai Santiprabhob said there was room to help growth if needed.
"We maintain our 2020 GDP growth forecast at 1.9 per cent, reflecting our view that the slowdown will extend into 2020," said Charnon Boonnuch, economist of Nomura in Singapore.
He expects the BOT to cut the key rate by another quarter point, likely in the second quarter. The BOT will next review monetary policy on March 25.