Thailand's economic growth eased to 2.7% in 3Q

Blame it on high base effects.

According to DBS, GDP growth eased to 2.7% YoY in 3Q from a revised 2.9% in the previous quarter. Part of this slowdown was caused by high base effects. 

Here's more from DBS:

In sequential terms, GDP registered a 1.3% QoQ sa growth in the period, a decent pick-up from being flat in 2Q. Nevertheless, there are enough factors to explain why the 3Q data is still broadly disappointing. We now look for GDP growth to come in at 3.2% YoY in 2013 and 4.5% YoY in 2014 (from 4.0% and 5.2% previously).

Net exports accounted for almost all the growth seen in 3Q. Export growth has ticked up slightly to 3.8% YoY in the period, but the weakness in import growth was dominant.

While there has been some slight improvement in export demand, export growth has remained lacklustre in 3Q. In fact, the important manufacturing sector has registered its second consecutive negative growth at -0.4% YoY in 3Q.

That external demand remained sluggish had been pretty much expected. It is the sharp moderation in the domestic economy that was disconcerting. Combined together, the drag from investment and private consumption growth was slightly more significant than that seen in 4Q 2011.

Private consumption growth came in at -1.2% YoY in 3Q, the first time in the negative since 4Q 2011. Back then, the floods caused the setback. This time around, financial market volatility and household debt overhang led to fast eroding consumer confidence. Further slippage in consumer confidence is really a concern going into 2014.

The recent recovery in capacity utilization has been encouraging. Export growth is unlikely to return to the double-digit in 2014 though.

That is still very much tentative on the pace of the global economic recovery. In the meantime, the government will remain in the limelight.

Frontloading the delayed THB 2.2tn infrastructure projects in early 2014 is a key assumption to our forecast. Missing that and we may see another sub-4% GDP growth next year.