The third quarter of Thailand’s economy showed a slowdown, with growth expanding by only 1.5% year on year. This was below the predicted 2.4% and lower than the previous quarter’s 1.8%. Despite this, private consumption and tourism remained strong, while public spending, inventories, and goods exports dragged growth down.
Srettha Thavisin took office as Thailand’s new prime minister in late September and faces the challenge of leading the country to long-term economic recovery amidst political turmoil. While there is optimism about tightening monetary policies, weak GDP figures for the third quarter have intensified concerns about Thailand’s economic outlook.
In response to these concerns, the Bank of Thailand raised its key interest rate for the eighth straight time in September and expects 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. If this happens, it could impact digital wallet handouts from the government, which may further weaken the Thai baht against the dollar.
The Thai baht has already weakened against the dollar this year due to policy changes that could exacerbate its decline if they continue. Despite this challenge, Thailand remains resilient and continues to grow economically despite political instability and global economic uncertainty.