On the other hand, trade diversion can lead to increased competition within Thailand as excess supplies of goods from China are diverted to the Thai market and priced at discount to compete with local products. Besides, prolonged uncertainties surrounding trade measures had led to unusual front-loading of exports in 2018 and will weigh on export growth in 2019—just when the global demand has begun to moderate. It can also impair business sentiments, preventing firms from taking on new investment projects. Ultimately, as the US-China trade disputes remain unresolved and the US’s inclination for further trade  1 Both products make up less than 1 percent of Thailand’s total exports  3/9  protectionism remains, such as potential US auto tariff measure, trade disputes will certainly be the key concern for all authorities. (2) Slowdown in the Chinese economy is another concern. While the slowdown may be in line with the Chinese authorities’ goal of restructuring the economy towards a long-run sustained growth model, in the short-term it can have significant impact on the Thai economy. This is because of high degree of linkages in terms of supply chain and production networks, tourism, and property investment. For instance, China is Thailand’s second largest export partner following the ASEAN region, making up about 12 percent of our exports in term of value while the Chinese tourists represent nearly 30 percent of total foreign tourists.
Private consumption strengthened, supported by improvements in employment in major sectors as well as government measures to support low income groups, such as the state welfare card project. In addition, private investment expanded with increased investments in machinery and equipment along with greater construction activities as the overall growth became more broad-based. We have seen markedly increasing interest from foreign investors, especially in the EEC area. Consequently, in 2018 the Thai economy expanded on a solid footing, with growth of 4.8 percent in the first half, before moderating in the second half due to slowing global demand. This weaker global demand was largely a result of slower economic growth in a number of major trading partners; a number of country-specific transitory factors; and uncertainties surrounding trade tensions between the US and China. Nevertheless, thanks to more balanced growth engines, the Thai economy grew 4.1 percent in 2018, an improvement from 4.0 percent growth in 2017. It was also the first time in a decade that the Thai economy registered consecutive annual growth of 4 percent. Looking ahead, the Thai economy is projected to continue to expand around its potential, with growth this year will slightly moderate to 3.8 percent as slower growth of major trading partners weighs on the export sector. Domestic demand would remain the key growth driver, as  2/9  private consumption continues to be supported by government welfare measures and underpinning factors, such as employment and consumer confidence, remain strong.