Details in the report pointed to weakness, with net exports contributing zero points to growth and inventories accounting for most of it on domestic demand. In sequential terms, private consumption was up strongly while government consumption and fixed investment were sluggish. On the external side, exports were flat while imports surged.
"Given today's weaker-than-expected report we have lowered our 2008 growth forecast by 0.1 percentage point to 4.4 per cent a year, but we have left the 2009 forecast at 3 per cent," the research said.
"Once we get manufacturing and domestic demand data later this week for October we will revisit our fourth-quarter and 2009 growth and the Bank of Thailand rate forecasts," JP Morgan said.
"We currently have the BOT easing monetary policy 25 basis points at its next meeting on December 3; however, given the slowdown in growth and inflation under way, there is the risk of a larger move," the report said.
In the details, private consumption rose 6.2 per cent quarter on quarter. This reflected some positive income effects from the sharp fall in food and oil prices over the quarter, but it was also likely partly a technical rebound following weak consumer spending in the second quarter of this year.
"Slowing economic growth should continue to weigh on private consumption, but consumer spending should also get a lift from lower inflation and fiscal stimulus that will primarily take the form of cash payments to rural areas via the village funds set up under Thaksin Shinawatra," JP Morgan said.
On the government side, expenditure growth was sluggish, up only 0.5 per cent after contractions in each of the two previous quarters. This component will likely rise strongly in coming quarters, assuming the government is able to implement its fiscal stimulus measures.
"Fixed investment remained sluggish, which is not surprising given the combination of slowing growth and political uncertainty," the research said. "On the external side, exports fell 0.3 per cent while imports surged 20.3 per cent."
The surge in imports is a bit surprising given that investment was so weak, but it likely reflected the stronger private consumption and some payback from the weak second-quarter growth figure, the JP Morgan research said.
The research added that in terms of contributions, inventories contributed 2.7 percentage points to the 4 per cent GDP growth figure while other components in domestic demand accounted for the rest. The contribution from net exports was actually zero.