Economic Slowdown in Thailand: A Possible Forewarning of Challenges to Come

Thailand’s economy grew by 1.5% in the quarter ending September, marking a slowdown for the second consecutive quarter. This was below the predicted growth rate of 2.4% by economists and lower than the 1.8% growth seen in the previous quarter. The weak GDP figures intensified concerns about the country’s economic outlook, particularly as political turmoil continues to plague the country.

The new prime minister, Srettha Thavisin, took office in late September and faces the challenge of leading Thailand to long-term economic recovery amidst political instability. Despite optimism surrounding a future of tightening monetary policies, weak GDP figures have led to concerns about the country’s economic outlook.

In response to these challenges, 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. In an effort to stimulate growth, there is a possibility that the government will push for large digital wallet handouts which could impact on currency value. Already this year, Thai baht has weakened against dollar and further policy changes could exacerbate its decline.