Thailand's growth beats as exports counter domestic weakness
Gross domestic product in the three months to June rose 2.8 per cent from a year earlier, the National Economic and Social Development Council said on Monday (Aug 18). That exceeded the 2.7 per cent median estimate in a Bloomberg News survey, and compared with a 3.2 per cent pace in the first quarter.
Like other Asian economies, Thailand appears to have benefited from the frontloading of exports ahead of US President Donald Trump's tariffs. The baht was little changed at 32.44 to the US dollar after the data.
'Export of goods continued to grow favourably, while private investment returned to expansion,' the council said. 'Meanwhile, private consumption expenditure, government consumption expenditure, public investment, and export of services decelerated.'
The South-east Asian nation is bracing for a potentially prolonged bout of economic weakness, thanks to the recently imposed 19 per cent tariff on shipments to the US, its biggest export market. Tourism has also faltered, while sentiment has not been helped by a bout of domestic political instability which has seen the prime minister suspended from office. There were also recent, deadly border clashes with Cambodia.
The Bank of Thailand last week cut the nation's benchmark rate for the fourth time since October to help support the fragile economy.
The economy grew 0.6 per cent from the first quarter, beating the 0.5 per cent forecast. For the first half of 2025, growth was 3 per cent, and the government tweaked its 2025 forecast to a range of 1.8 to 2.3 per cent from 1.3 to 2.3 per cent.
The nation's biggest private sector group earlier this month raised its 2025 growth forecast to 1.8 to 2.2 per cent after Thailand secured the 19 per cent US levy, which is lower than the earlier threatened 36 per cent. Still, it warned that intense price competition, a strong baht and the slowdown in tourism could weigh on the economy in the second half of the year. BLOOMBERG
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
13 minutes ago
- Straits Times
Trump tariffs get seal of approval as S&P affirms US credit rating
Singapore - US President Donald Trump's sweeping tariffs have roiled markets, unnerved trade partners and provoked criticism from leading economists. But there is an upside: The levies will help the United States maintain its fiscal health, according to S&P Global Ratings. The credit rating company has affirmed its AA+ long-term rating for the US, in part because it thinks tariff revenues will reduce the fiscal hit of a recent tax and spending bill. It kept the outlook for the long-term rating stable. The decision offers a glimmer of good news for Mr Trump, who has pushed back against arguments that his historic programme of tariffs will damage the US economy. Although the S&P analysts didn't contradict that view, they stressed that as Mr Trump embarks on a bold programme of tax cuts and spending, tariffs will help soften the blow. 'Amid the rise in effective tariff rates, we expect meaningful tariff revenue to generally offset weaker fiscal outcomes that might otherwise be associated with the recent fiscal legislation, which contains both cuts and increases in tax and spending,' wrote analysts in a note. S&P's views matter for investors in the world's biggest bond market, which has been plagued by persistent questions over the fiscal deficit and debt sustainability. Yields on 30-year Treasuries jumped above 5 per cent in May as tariff fears and Mr Trump's multi-trillion dollar tax bill roiled global markets. Buy America Whether tariffs will give the US a meaningful revenue boost is a subject of debate among economists, who point to an apparent contradiction at the heart of Mr Trump's approach: Tariff revenues rely on trade, but Trump has also attempted to pull production back to the US and encourage consumers to buy American-made products – moves that would undercut future levy receipts. So far, the numbers are strong. Tariff revenue reached a fresh monthly record in July, with customs duties climbing to US$28 billion (S$36 billion). US Treasury Secretary Scott Bessent said tariff revenues for all of 2025 could be 'well in excess of 1 per cent of GDP,' revising his previous estimate of US$300 billion. But the bipartisan Congressional Budget Office estimates the recently passed budget bill will add US$3.4 trillion to the deficit over the next 10 years. Top stories Swipe. Select. Stay informed. Singapore Two China Eastern Airlines planes involved in runway incursion at Changi Airport in Aug 2024 Life Local indie theatre The Projector to cease operations on Aug 19 after a decade Singapore 'I vaped when I woke up until I slept': More youth vaping to cope with stress, say social workers Asia Singaporean man sentenced to 72 years' jail in Malaysia for murdering wife and stepson Singapore 4 days' jail for former pre-school teacher who kicked and bruised pupil's shin Life Disrupted sleep, steroid psychosis: How chronic sinus condition affected one S'pore hawker's life World Trump's art of the 'peace' deal for Ukraine and Russia US 30-year yields were close to flat around 4.94 per cent in Asia trading on Aug 19, while those on benchmark 10-year yields edged higher to 4.34 per cent. That pointed to a muted short-term impact from the S&P report, even if it adds an important voice as traders weigh up the impact of tariffs over the coming months. 'These are still small nuances close to the top of the credit ratings hierarchy and it doesn't signal any material change in the US fiscal health, which is a complex issue,' said Homin Lee, senior macro strategist at Lombard Odier in Singapore. The US lost its last top rating from the big three credit companies in May, when Moody's Ratings lowered the country from Aaa to Aa1. It blamed successive administrations and Congress for swelling budget deficits that it said show little sign of abating. Fitch Ratings and S&P had previously downgraded the US from AAA. S&P said the stable outlook indicates its expectation that while the fiscal deficit won't meaningfully improve, it also won't persistently deteriorate over the next several years. The agency expects net general government debt to surpass 100 per cent of GDP over the next three years, but it thinks the general government deficit will average 6 per cent from 2025 to 2028, down from 7.5 per cent ion 2024. The rating affirmation could be a positive for the US dollar after Trump's tax and spending bill cast doubts on the sustainability of US debt, said Fiona Lim, a senior currency strategist at Malayan Banking. Still, the more lasting driver for the greenback will come from Federal Reserve minutes, as well as Fed chair Jerome Powell's speech in Jackson Hole on Aug 22, she said. A gauge of the dollar edged higher during Asia trading hours on Aug 19. BLOOMBERG
CNA
13 minutes ago
- CNA
Responding to Trump invasion comments, Taiwan says must rely on itself for security
TAIPEI: Taiwan must rely on itself for its security, the island's foreign ministry said on Tuesday (Aug 19), responding to US President Donald Trump saying Chinese President Xi Jinping told him he would not invade the island while Trump was in office. Democratic Taiwan has over the past five years or so faced ramped up military and political pressure from China, which views the separately governed island as its "sacred" territory. Beijing has never renounced the use of force to bring Taiwan under its control. Asked about Trump's remarks, Taiwan Foreign Ministry spokesperson Hsiao Kuang-wei said the government closely monitored interactions between senior US and Chinese officials. "Taiwan's security must be achieved through its own efforts, so our country has been dedicating itself to raising its self-defence capabilities and resilience. Our country will keep working hard to do this," Hsiao told reporters in Taipei. The United States is Taiwan's most important international backer and arms supplier, although there are no formal diplomatic ties. There is also no defence treaty, so should China attack, Washington is under no obligation to help. The United States, which is, however, bound by law to provide Taiwan with the means to defend itself, has long stuck to a policy of "strategic ambiguity", not making clear whether it would respond militarily to a Chinese attack on Taiwan. , ahead of talks in Alaska with Russian President Vladimir Putin over Moscow's war in Ukraine. On Monday, China's foreign ministry said Taiwan was an internal matter that was for the Chinese people to resolve.
Business Times
43 minutes ago
- Business Times
Asian currencies gain as investors turn from dollar and rupee; baht among standout plays
[SINGAPORE] Fresh capital is piling into select Asian currencies from the Taiwan dollar and Singapore dollar to the Malaysian ringgit on the back of rate-cut bets, a persistently weak greenback and supportive domestic conditions, while India's rupee has slipped amid fraying India-US ties. At the forefront of Asian gains against the greenback is the Taiwan dollar, which has rallied 8.3 per cent as at Tuesday (Aug 19), albeit down from the 12 per cent surge it posted in July. Its latest advance places it alongside the Singapore dollar and the ringgit. The safe-haven Singapore currency has outperformed South-east Asian peers with a 6 per cent climb against the US dollar since end-2024. It is followed by the high-beta ringgit that has gained more than 5 per cent to around 4.20 to the US dollar from 4.50 in end-2024. Sumitomo Mitsui Banking Corporation (SMBC) economist Ryota Abe expects investment flows to shift towards Thailand, South Korea and Japan, which he sees emerging as the next key destinations. Foreign investors have been flocking to Thai and South Korean bond markets on rate cut expectations, driving net inflows in recent months. Meanwhile, the rupee surrendered all its gains for the year following sharp depreciations against the US dollar that necessitated central bank intervention. The volatility comes with US President Donald Trump's threat to hike tariffs on Indian exports to 50 per cent. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Julius Baer's fixed income analyst Asia, Magdalene Teo, said that this would hurt India's export competitiveness, with street estimates pegging the damage on the gross domestic product growth of the world's fourth largest economy at around 0.6 to 0.9 percentage points. And, with a 50-per-cent tariff sustained, the rupee could be well above the 89 handle with further underperformance against its Asian and G10 currency peers, said MUFG Bank senior currency analyst Michael Wan. That said, domestic reforms such as recently announced ones on India's goods and services tax could offset the bite from US tariffs and boost the country's long-term growth potential, added Wan. The greenback has been weighed down by bearish sentiments owing to inflation fears, ballooning debt, trade policy uncertainties as well as the friction between Washington and the US Federal Reserve chair, to name a few. The currency notched its worst first-half slump in more than five decades of 10.7 per cent. The US dollar index has since pared some losses but is still nursing a more than 9 per cent slide year to date. Baht: High risk, high reward? Thailand's bond market in April charted its highest monthly inflow of about US$2 billion in some two years, though the figure has since moderated and its stock market remains subdued. The SMBC economist said: 'If Thailand's economy revives after several rate cuts, we can hope Thai stocks – which have been far behind other peers – will be rising and this volatility will provide chances for investors to invest in the baht.' But Maybank's head of foreign exchange research Saktiandi Supaat cautioned that weak fundamentals in the kingdom's economy and financial sector could constrain gains. Saktiandi told The Business Times: 'Although the baht remains a well-supported emerging market currency over riskier alternatives in Asia, recent policy easing limits the baht's immediate upside, even if sentiment remains somewhat positive.' While the house remains neutral to slightly bullish on the baht against a softening US dollar, the Thai currency is not a definitive favourite among its regional counterparts, said the economist. He continued: 'Aside from the subdued real economy, falling credit demand and worsening credit quality have cast a pall over the Thai financial sector.' Official data released on Monday revealed that the kingdom's real gross domestic product growth slowed to 2.8 per cent year-on-year in Q2 2025, down from an upwardly revised 3.2 per cent the previous quarter. Analysts from Moody's Ratings expect Thailand's growth potential to weaken further as limited progress on long-term reforms, domestic political uncertainty and heightened global trade instability compound deep-rooted structural issues. Alongside faltering growth prospects, Thailand's fiscal outlook is expected to deteriorate, said the analysts in an Aug 14 report. Won, yen: Steady as they go South Korea's bond market marked in May its largest monthly inflow of a net 11.34 trillion won (S$10.5 billion) of listed bonds since 1998, Bloomberg data indicated, extending April's bumper haul. The figure has since softened, but Abe expects that South Korea's corporate value-up programme that aims to boost stock-market returns and broaden the appeal of its equities will invite more inflows, increasing demand for the won. The SMBC economist also flagged Japan as a potential next destination amid the current uncertain environment. He told BT that investors' risk appetite for Japanese government bonds is increasing with rising yields, which, considering a basis swap, are lucrative for foreign investors holding US dollars. Both the won and the yen have gained some 6 per cent in the year to date against the US dollar, recouping their losses from the previous year. Asean FX: Domestic support sates investors South-east Asian currencies continue to rally, with the ringgit remaining a top performer among its peers and the rupiah expected to gain on strengthening domestic fundamentals. Maybank's Saktiandi noted that measures by Indonesia's central bank to stabilise the rupiah and its foreign exchange reserves continue to provide a strong buffer for external resilience and support macroeconomic and financial system stability. 'Bank Indonesia's initiatives to stimulate bank lending have also begun to show results as reflected in the pace of decline in deposits held — early signs of improved credit distribution,' he said. Yet, despite the house's positive outlook on the rupiah, Saktiandi cautioned that gains are still expected to be limited given that investor sentiment towards the currency would take time to strengthen. Tariffs lose bite Amid all the different factors that come into play, rate-cut expectations have returned as the dominant driver for markets, said DBS senior foreign exchange strategist Philip Wee. 'The frequency of Trump's tariff threats since June has reduced their shock value, while markets have become desensitised to what they consider long-running political risks in Ukraine and Gaza, where the conflicts only matter if they are seen materially altering global and inflation prospects,' he said. Instead, the house will be paying more attention to the upcoming US Federal Reserve's Jackson Hole Economic Symposium later this week. 'Investors will be weighing how market pricing for Fed cuts aligns with (internal divisions) between Powell's camp urging caution over tariff-driven inflation and Trump-aligned voices pressing for faster easing,' said Wee.
