After strong GDP growth of +4.1% in 2018, we expect Thailand to be increasingly affected by the global downturn in trade and the uncertainty surrounding the US-China trade feud. While fiscal stimulus and an accommodating monetary policy are expected to partially offset the effects of the deteriorating external environment, current policy uncertainty might undermine business and consumer confidence to some extent, and could limit the growth momentum in the near term.

Thailand enjoys a solid external position. The current account surplus remained large at around +7.5% of GDP in 2018, even though this was down from a peak of +11.7% in 2016. Its export dependence makes Thailand also particularly vulnerable to the recent slowdown in global trade and weakening demand in advanced economies, as well as uncertainty around the US-China trade feud. As a result, we expect the current account surplus to narrow further in 2019-2020, though it should remain well in positive territory.