Thai GDP growth slowed in Q2, with yuan denting outlook

Tourists taking selfies at the Emerald Buddha Temple in Bangkok on Aug 7.
Tourists taking selfies at the Emerald Buddha Temple in Bangkok on Aug 7. PHOTO: EPA

BANGKOK (BLOOMBERG) - Thailand's economic growth slowed in the second quarter, as improving government spending and tourism failed to counter weak local demand and exports.

Gross domestic product gained 2.8 per cent in the three months through June from a year earlier, the National Economic and Social Development Board said on Monday (Aug 17). That matched the median estimate in a Bloomberg survey of 22 analysts, and compares with 3 per cent in the previous period. GDP grew 0.4 per cent from the previous quarter.

Prime Minister Prayuth Chan-Ocha has said he will reshuffle his cabinet as pressure increases to bolster an economy struggling with a slump in manufacturing and sliding exports. Last week's unexpected yuan devaluation is an added wrinkle for the government, which has pledged higher investment spending in its budget for the fiscal year starting Oct. 1.

"The yuan devaluation is not good news for Thailand, as it will put more pressure on our exports," Pimonwan Mahujchariyawong, a Bangkok-based economist at Kasikorn Research Co., said before the data release. "Government spending and tourism are the only two engines that can drive growth. But the outlook is dimmer now with the yuan move."