Thailand’s economy expanded by 1.5% year on year for the quarter ending in September, marking a slowdown for the second consecutive quarter. This figure was below the 2.4% predicted by economists and lower than the 1.8% growth seen in the previous quarter. Despite this, private consumption and tourism remained strong, but public spending and inventories dragged growth down.
Thailand’s new prime minister, Srettha Thavisin, took office in late September and faced the challenge of leading the country to long-term economic recovery amidst political turmoil. While there was optimism surrounding a future of tightening monetary policies, the weak GDP figures for the third quarter intensified concerns about the country’s economic outlook.
The Bank of Thailand raised its key interest rate for the eighth straight time in September and expected growth and inflationary pressures to accelerate in the coming year. However, analysts at Nomura predict a pause in the central bank’s policies in the near term, with the possibility of rate cuts by the second quarter of 2024. The weak GDP figures may lead to government handouts of large digital wallets which could impact on Thai baht currency that has already weakened against dollar this year. Further policy changes could exacerbate its decline.
In order to boost economic recovery, Prime Minister Srettha Thavisin must address political instability while implementing effective policies that will stimulate growth and increase investor confidence. He must also tackle issues such as corruption and inequality which are major obstacles to sustained economic growth.
Despite these challenges, there are still opportunities for Thailand to recover from its current slowdown if effective measures are taken to address underlying issues such as low productivity and high debt levels.
Overall, Thailand’s economy is facing significant challenges but with proper leadership and strategic policies it can overcome them