Thailand’s economy grew by just 1.5% in the third quarter, marking a slowdown for the second consecutive quarter. This figure was lower than the predicted 2.4% growth and below the 1.8% seen in the previous quarter. Despite this, private consumption and tourism remained strong, but public spending, inventories, and goods exports dragged down growth.
The new Thai Prime Minister Srettha Thavisin took office in late September amidst political turmoil and faced the challenge of leading the country to long-term economic recovery. The weak GDP figures for this quarter intensified concerns about the country’s economic outlook further.
In response to these challenges, the Bank of Thailand raised its key interest rate for an eighth straight time in September, expecting 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 a possibility of rate cuts by the second quarter of 2024. The weak GDP figures could lead to government plans to hand out large digital wallet payments, which could impact the Thai baht negatively as it has already weakened against the dollar this year.