Residents rest in front of a fan in Bangkok on April 25, 2023.
André Malerba | Bloomberg | fake images
Thailand’s economy grew at its slowest pace in almost a year in the third quarter and analysts say the trend is here to stay.
Thailand’s gross domestic product grew 1.5% year-on-year during the quarter ending in September, official data showed on Monday. That is well below the 2.4% expectations of economists polled by Reuters, and less than the 1.8% expansion in the second quarter.
The reading marked the second consecutive quarter to facilitate the growth of the Thai economy.
“Public spending, inventories and exports of goods were all down, despite strong private consumption and tourism,” said Chua Han Teng, an economist at DBS Bank, warning that the scope for public spending was shrinking amid populist policies.
After months of political deadlock and stock market volatility, Srettha Thavisin was elected Thailand’s prime minister in late September, amid expectations from economists that the long-term economic recovery could prove challenging.
“Consecutive quarters of weak GDP on the production side indicate a weaker Thai economy than market sentiment suggests, despite robust consumption growth,” Bank of America Global Research analysts said in a note.
“Anticipating a more pronounced impact from tightening monetary policies in the future,” they said.
The Bank of Thailand raised its key interest rate for the eighth consecutive time at its September policy meeting and said economic growth and inflation pressures should rise next year.
But Nomura analysts expect a pause from the Thai central bank at its next meeting on November 29 and until 2024.
“However, we still see the risk of rate cuts as early as the second quarter of 2024,” Nomura said. “Importantly, the weak third-quarter GDP result will likely intensify the government’s push for a large digital wallet donation, despite uncertainty around the funding plan.”
A long pause or possible cuts in The official BOT interest rate could also mean bad news for the thai bahtwhich has lost 1.3% against the dollar so far this year and is heading for its fourth annual decline.