Thailand’s economy grew at a slower rate of 1.5% year on year for the quarter ending in September, marking the second consecutive quarter of decline. This figure was lower than the predicted growth of 2.4% by economists and below the 1.8% growth seen in the previous quarter. The government attributes this slowdown to several factors, including public spending, inventories, and goods exports. However, private consumption and tourism remained strong, providing some stability to the country’s economy.
Thailand’s new prime minister, Srettha Thavisin, took office in late September and faces the challenge of leading the country towards long-term economic recovery amid political turmoil. Despite optimism surrounding tightening monetary policies, weak GDP figures for the third quarter intensified concerns about Thailand’s economic outlook. In response to this challenge, 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 a possibility of rate cuts by the second quarter of 2024. The weak GDP figures may lead to government pressure for large digital wallet handouts that could impact Thailand’s currency further weakening against dollars this year. With additional policy changes exacerbating its decline, it remains uncertain how much longer Thailand can sustain its current economic trajectory.
In summary, while there are some positive signs like private consumption and tourism remaining strong despite a slower growth rate for Q3 2022 due to various factors such as public spending, inventories and goods exports; still there is uncertainty about Thailand’s economic future with new Prime Minister Srettha Thavisin facing political turmoil challenges while Bank of Thailand raising interest rates eight times consecutively hoping to accelerate growth and inflationary pressures but analysts predicting a pause in central bank policies with possibility of rate cuts by Q2 2024 which could impact currency further weakening against dollars this year along with other policy changes exacerbating its decline.