Economic conditions are expected to improve this quarter because of a smaller export contraction and positive domestic demand in April, says the Bank of Thailand.
The value of merchandise exports contracted by 2.9% year-on-year in April, improving from a 4.2% contraction in March, according to central bank data. Exports fell by 3.6% year-on-year in the first quarter.
The export contraction in April could be attributed to weaker global demand as a result of slower economic growth in a number of Thailand's major trading partners, due to tit-for-tat tariff hostility between China and the US.
Exports grew a mere 0.2% in the first four months of 2019, said Pornpen Sodsrichai, director of the central bank's economic and policy department.
A continued downturn in the electronic cycle and last year's high-base effect were also identified as key pressures on export growth, she said.
Exports in certain categories, however, continued to expand, such as electric appliances, agricultural products, and cars and parts.
"Despite better signs for April's exports, the central bank needed to assess an escalating trade war between the US and China in May twice to forecast the situation clearer," Ms Pornpen said.
Thailand's economy in April expanded from the previous month, with domestic demand as the main growth driver, including private consumption and domestic investment by the government and the private sector.
Private consumption continued to expand in April in all spending categories, consistent with an increase in manufacturing production.
In particular, auto production rose by 13.4% year-on-year, up from 2.4% in March.
Public spending expanded from capital expenditure supported by accelerated disbursement from the Highways, Rural Roads and Royal Irrigation departments after the reassessment and realignment of the investment projects to the master plan under the 20-year national strategic framework.
Private investment indicators grew slightly from the same period last year.
Investment in machinery and equipment expanded from imports of capital goods and the number of newly registered motor vehicles for investment.
Investment in construction, however, continued to contract from a decline in permitted construction areas, except for manufacturing purposes.
Thailand's tourism sector rebounded to 3.3% year-on-year growth in April after a 0.7% contraction in March. Foreign tourist numbers showed positive signs for the first four months of the year at 13.9 million, up 2.1% year-on-year.
The central bank predicts total foreign tourist arrivals at 40.4 million in 2019.
With this scenario, domestic demand will be the key engine driving the country's economic expansion, Ms Pornpen said.
