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Thailand’s economy grew at its weakest pace in five years in 2019, as exports and public investments slowed, and the impact from the coronavirus epidemic is set to pile more pressure on Southeast Asia’s second-largest economy this year.

The trade-dependent economy has been buffeted by the Sino-U.S. trade war, soft domestic demand and a delayed fiscal budget and drought. Tourism was one bright spot the authorities were hoping would help offset slowdowns elsewhere.

Some analysts expected the central bank to further cut rates from record lows to bolster growth this year.

Gross domestic product expanded 1.6 percent in the October-December quarter from a year earlier, versus 2.1 percent forecast in a Reuters poll and the third quarter’s upwardly revised 2.6 percent growth.

In 2019, the economy grew 2.4 percent, the slowest rate since 2014, but was smack in line with analysts’ forecast.

On a quarterly basis, the economy grew 0.2 percent in the October-December quarter, the National Economic and Social Development Council (NESDC) said, in line with an upwardly revised 0.2 percent in July-September.

“We maintain our 2020 GDP growth forecast at 1.9 percent, reflecting our view that the slowdown will extend into 2020, due to the covid-19 outbreak, a budget delay and drought,” said Charnon Boonnuch, economist of Nomura in Singapore.

“We still pencil in another 25 basis-point policy rate cut by the (Bank of Thailand), likely delivered in Q2.”

Outlook Cut

The state planning agency on Monday cut its forecasts for 2020 economic growth to 1.5-2.5 percent from 2.7-3.7 percent, and lowered its outlook for exports, the main growth driver, to 1.4 percent from a 2.3 percent increase projected in November.

Growth in 2018 was revised up to 4.2 percent from 4.1 percent.

Last week, senior central bank director Don Nakornthab said the economy might expand less than 2 percent this year, with first-quarter growth seen below 1 percent, due mainly to the virus outbreak.

Earlier this month, the Bank of Thailand cut its policy rate to a record low of 1 percent, and Governor Veerathai Santiprabhob said there was room to help growth if needed.

Thailand’s growth has lagged regional peers for years. In addition to weak exports, private consumption has been constrained by high household debt and some investment has been stalled by the delayed 3.2 trillion baht ($102.70 billion) budget. The government expects spending to start in May.

Annual exports in the December quarter declined 4.9 percent and public investment fell 5.1 percent while tourism growth slowed to 6.4 percent NESDC data showed.

This year, the agency expects foreign tourist numbers to fall to 37 million this year from last year’s record 39.8 million, due to the virus outbreak.

The Tourism Authority of Thailand expects foreign visitors to fall by 5 million this year and the loss in revenue could be as much as 500 billion baht.

It forecasts 2 million fewer tourists from China alone, which accounted for 28 percent of Thailand’s tourists and tourism revenue last year.

(Additional reporting by Satawasin Staporncharnchai; Editing by Jacqueline Wong)

This article was written by Kitiphong Thaichareon and Orathai Sriring from Reuters and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Photo Credit: Motorists and tuk-tuks at a traffic junction in Bangkok. Hans van der Kroef / Flickr