Real GDP rose by +4% in Q4 2017 (after +4.3% in Q3). On the production side, growth was driven by a rise in non-agricultural production (+4.6% y/y) while agriculture contracted (-1.3% y/y) due to unfavora¬ble weather and floods. On the expenditure side, exports expanded at a fast pace (+7.4% y/y, up from +6.9% in Q3) supported by dynamic services exports (+9.7% y/y) thanks to a rise in foreign tourist arri¬vals. Private consumption remained healthy (+3.5% y/y) thanks to a combination of robust (non-farm) income growth, low inflation and solid consumer confidence. Investment underperformed with marginal growth of +0.3% y/y due to weaker growth in private and public construction. Overall, economic growth accelerated to +3.9% in 2017 (from +3.3% in 2016). Looking ahead, we expect growth to remain firm but the pace may slow slightly to +3.6% in 2018. On the upside, we expect domestic expenditures to pick up speed as the development of the Eastern Economic Corridor should help boost investment. On the downside, slower growth in China (forecast at +6.4% in 2018) should dent Thai export growth.
