Thailand trims outlook again as Q3 GDP hit by export slump

BANGKOK: Thailand cut its outlook for the fourth time this year after its economy grew much less than expected in the July-September quarter, hit by a contraction in exports and tourism.

The surprisingly weak outlook has raised doubts the junta can quickly turn the economy around even after pledging to roll out infrastructure projects and other steps to boost spending.

Southeast Asia's second-largest economy grew 1.1 percent in the third quarter from the prior three months, and 0.6 percent from a year earlier, the National Economic and Social Development Board (NESDB) said on Monday.

For 2014, the agency cut its growth forecast to 1.0 percent - its weakest since the devastating floods of 2011 and the slowest pace among major Southeast Asian countries this year.

A Reuters poll of economists had forecast quarterly growth of 1.8 percent and annual growth of 1.0 percent.

Last November, when political unrest began, the agency had a 2014 forecast of 4.0-5.0 percent, but that has been steadily lowered as the economy struggled to gain traction.

The army seized power on May 22 in a bid to end the crisis and revive the economy, but progress has been limited so far. Badly hit sectors such as tourism are recovering only slowly.

Economists say the chance of looser policy is now growing.

"The relatively soft momentum in the 3Q GDP report will add further weight to the argument that Bank of Thailand should ease again," said economist Benjamin Shatil of JPMorgan in Singapore.

But he added that "it is not clear to us that another 25 bp cut will have much of an effect" in stimulating activity.

The Bank of Thailand next reviews its policy rate on Dec. 17 after keeping it steady at 2 percent since March. On Saturday, the BOT said a rate cut would not help much.

Thai exports, equal to over 60 percent of GDP, shrank 1.7 percent in the third quarter due to slower global growth that hit pivotal sectors such as autos and agriculture. Household spending and investment improved only slightly.

But the NESDB is optimistic the economy will grow more than 3 percent in the fourth quarter as exports recover and stimulus steps, such as subsidies for farmers, help consumption. It sees 2015 exports up 4 percent, in line with the Commerce Ministry.