Thailand's economy sinks in the red in 1Q

GDP dips to a disappointing 0.6%.

According to DBS, Thailand's 1Q GDP growth came in broadly disappointing at -0.6% YoY. On sequential terms, the economy contracted by a seasonally adjusted 2.1% QoQ. This is the worst quarterly performance since 4Q2011, which was at the peak of the disastrous floods.

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We revise our 2014 and 2015 GDP growth forecasts to 1.8% YoY and 4.8% YoY respectively, down from 3.1% and 5.3% previously. The drag from domestic demand is likely to remain prevalent, at least throughout 2Q14 and possibly into the early part of 3Q14. 

This is unlike 2011 when the contraction in the domestic economy was limited to just one quarter. In fact, both private consumption and overall investment growth are now in the negative territory (on QoQ, sa basis) for the third consecutive quarters. With confidence among consumers and businesses remaining weak, we may see another GDP contraction in 2Q14, dragging the economy to a technical recession.