Thailand’s economy grew at an annual rate of 1.5% in the quarter ending September, marking a slowdown for the second consecutive quarter. This figure was lower than the 2.4% predicted by economists and below the 1.8% growth seen in the previous quarter. Several factors contributed to this decline, including public spending, inventories, and goods exports. Despite this, private consumption and tourism remained strong.
The new Prime Minister of Thailand, Srettha Thavisin, took office in late September and faced the challenge of leading the country to long-term economic recovery amid political turmoil. While there was optimism surrounding a future of tightening monetary policies, the weak GDP figures for the third quarter intensified concerns about the country’s economic outlook.
In response to these challenges, the Bank of Thailand raised its key interest rate for the eighth straight time in September and expected growth and inflationary pressures to accelerate in the coming year. However, analysts at Nomura predict a pause in central bank policies in the near term, with the possibility of rate cuts by the second quarter of 2024. The weak GDP figures may lead to government measures such as large digital wallet handouts that could impact Thailand’s currency. The Thai baht has already weakened against the dollar this year, and further policy changes could exacerbate its decline.
Overall, while there are concerns about Thailand’s economic outlook following two consecutive quarters of slower growth and weaker GDP figures than expected, there are still opportunities for long-term economic recovery if effective measures are taken by both government officials and central bank policymakers to address underlying issues such as political instability and structural weaknesses within certain industries (such as tourism).