Residents rest in front of a fan in Bangkok on April 25, 2023.
André Malerba | Bloomberg | Getty Images
Thailand’s economy recorded its slowest growth 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 for the quarter ending in September, according to official data released on Monday. That’s well below the 2.4% expectations of economists polled by Reuters, and lower than the 1.8% expansion in the second quarter.
This figure marks the second consecutive quarter to slow down the growth of the Thai economy.
“Government spending, inventories and exports of goods have slowed, despite firm private consumption and tourism,” said Chua Han Teng, an economist at DBS Bank, warning that room for government spending was narrowing as because of populist policies.
After months of political gridlock and stock market volatility, Srettha Thavisin was elected Thailand’s prime minister in late September, amid expectations among economists that long-term economic recovery could prove difficult.
“Consecutive quarters of weak GDP on the production side signal a weaker Thai economy than market sentiment suggests, despite strong consumption growth.” ” Bank of America Global Research analysts said in a note.
“They anticipate 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 inflationary pressures were expected to accelerate 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 continue to see a risk of rate cuts as early as the second quarter of 2024,” Nomura said. “Importantly, weak GDP in the third quarter will likely intensify the government’s push for a large digital wallet, despite uncertainty surrounding the financing plan.
A long break or potential outages the BOT key rate could also be bad news for the Thai bahtwhich has lost 1.3% against the dollar since the start of the year and is heading for its fourth annual decline.
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