In the third quarter of 2023, Thailand’s economy grew at a slower rate of 1.5% compared to the previous quarter, marking a consecutive decline in growth for two quarters in a row. This was below the predicted growth of 2.4% by economists and lower than the 1.8% growth seen in the previous period. Despite this, private consumption and tourism remained strong, while public spending, inventories, and goods exports dragged down growth.
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 amidst political turmoil. While there was optimism surrounding a future of tightening monetary policies, 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 to stimulate economic activity and impact currency values like the Thai baht.
This year alone, Thai baht has already weakened against USD due to policy changes that could exacerbate further decline if implemented.
Overall, Thailand’s economy continues to face challenges as it tries to recover from political instability while navigating monetary policies aimed at stabilizing growth and inflationary pressures.