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Thailand Cuts Outlook After Economy Logs Weakest Growth Since 2014

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The Thai economy grew at the slowest pace in more than four years in the first quarter of 2019 as trade wars and global slowdown weighed on exports, driving the government to downgrade the overall growth outlook for the year.

Gross domestic product expanded 2.8 percent from last year in the first quarter, slower than the 3.6 percent expansion seen a quarter ago, data from the National Economic and Social Development Council showed Tuesday.

The rate was also weaker than the expected 2.9 percent and the slowest since the fourth quarter of 2014, when GDP gained 2.4 percent.

Quarter-on-quarter, the economy expanded 1 percent following a 0.9 percent rise in the preceding period.

The government lowered its growth outlook for this year to 3.3-3.8 percent from 3.5-4.5 percent estimated earlier.

Political risks surrounding the general election weighed on economic activity in the first quarter. The expenditure-side breakdown of GDP showed that growth in private spending slowed to 4.6 percent annually in the first quarter from 5.4 percent.

Meanwhile, the increase in government consumption expenditure accelerated to 3.3 percent from 1.4 percent.

Gross fixed capital formation advanced 3.2 percent, attributed to private investment with a rise of 4.4 percent and a 0.1 percent drop of public investment, data showed.

Exports and imports of goods and services decreased 4.9 percent and 0.2 percent respectively, versus an increase of 0.7 percent and 5.7 percent in the fourth quarter.

On the production side, the agricultural sector rose 0.9 percent and the non-agricultural sector grew 3.0 percent.

The current low inflation provides sufficient room for easing to support growth with lower interest rates, Prakash Sakpal, an ING economist, said.

The economist viewed that the 25 basis point Bank of Thailand policy rate hike in December 2018 was not necessary and it is now time to reverse it. The rate hike in December was the first in over seven years.

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