- Thailand’s economy slowed for the second consecutive quarter, growing 1.5% year on year.
- DBS warned that space for public spending was shrinking amid populist policies.
Residents rest in front of a fan in Bangkok on April 25, 2023.
Andre Malerba | Bloomberg | getty images
Thailand’s economy grew at its slowest pace in nearly a year in the third quarter and analysts say the trend is here to stay.
Official data on Monday showed Thailand’s gross domestic product grew 1.5% year-on-year in the quarter ended September. That was well below the 2.4% expectation of economists polled by Reuters, and well below the 1.8% expansion in the second quarter.
The reading marked the second consecutive quarter of Facilitating growth in Thailand’s economy,
“Public spending, inventories and goods exports declined despite strength in private consumption and tourism,” said DBS Bank economist Chua Han Teng. He warned that the scope for public spending was shrinking amid populist policies.
After months of political gridlock and stock market volatility, amid economists’ expectations that a long-term economic recovery could prove challenging, Shretha Thavisin was elected Prime Minister of Thailand in late September.
“Weak production-side GDP for consecutive quarters indicates that the Thai economy remains weaker than market perception, despite strong growth in consumption.” Bank of America Global Research analysts said in a note.
“There are fears that future tightening of monetary policies will have a more pronounced impact,” he 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 increase next year.
But Nomura analysts expect the Thai central bank to extend the freeze to 2024 at its next meeting on Nov. 29.
“However, we continue to see a risk of a rate cut as early as the second quarter of 2024,” Nomura said. ,“Importantly, the weak GDP result in the third quarter will increase the government’s pressure for a larger digital wallet distribution despite uncertainty over the financing plan.”
A long pause or possible cut The BOT’s policy rate could also be bad news for the Thai baht, which has declined 1.3% against the dollar so far this year and is on track for its fourth annual decline.