Q1 real GDP growth decelerated to +2.8% y/y (+3.6% in Q4) as sluggish external demand hit exports (-4.9% y/y). Consumer spending (+4.6%) and fixed investment (+3.2%) slowed down in Q1; only public spending (+3.3%) gained momentum while inventories added a strong +2.8pp to Q1 growth. Going forward, we expect Thailand to remain affected by the global slowdown in trade and the uncertainty surrounding the U.S.-China trade feud. While fiscal stimulus and accommodating monetary policy should partially offset the effects of the deteriorating external environment, ongoing policy uncertainty might undermine business and consumer confidence to some extent, and could limit the growth momentum in the near term. After the general elections in spring 2019, no party had a majority of seats in the House of Representatives. But it looks now as if a pro-military coalition has been formed that will support the continuation of a military-led civilian government. As a result, policy delays are likely to continue as well. Overall, we expect full-year growth to slow to a still solid +3.4% or so in 2019 (after +4.1% in 2018).
