Thai economy continued to grow in Q3, but slowed in September

Thailand’s economy in the third quarter this year expanded from the previous quarter, but economic activities began slowing in September, the Bank of Thailand (BOT) said in its monthly report on economic and monetary conditions.

The central bank said the trend in September was mainly the decline of exports after strong growth in August. Private consumption also declined, it said, particularly in durables, consistent with a decrease in manufacturing production, while private investment was stable.

The number of foreign tourists, after seasonal adjustment, decreased from the previous month, mainly due to a slowdown in Chinese tourists, who deferred their travel in anticipation of the long Golden Week holiday at the beginning of October.

The BOT said tourists from certain countries, such as Malaysia and South Korea, increased. Tourism revenue, after seasonal adjustment, also increased, driven by higher spending per trip as long-haul visitor numbers rose.

Government spending in September also expanded, driven by both current and investment expenditures by the central government, while investment expenditures by state-owned enterprises contracted, primarily in rail transport projects.

On the economic stability front, headline inflation in September increased across all major categories from the previous month. Energy inflation rose due to a low base effect from last year, which had benefited from government subsidies, while fresh food prices increased due to higher vegetable prices.

The report said that core inflation also increased in September, driven by higher prepared-food prices. The current account surplus narrowed as the deficit in services, income, and transfers widened, primarily due to lower tourism revenue during the off-season and higher profit repatriation by foreign businesses, while the trade balance surplus remained unchanged.

The labour market condition in September was stable, not varying much from the previous month. Employment in tourism-related services improved, while the construction and trade sectors weakened, consistent with a slight increase in the ratio of unemployment claims to total insured persons.

The BOT concluded that in the third quarter, the Thai economy improved from the previous quarter, supported by strong exports of goods following the recovery in the electronics cycle and temporary positive factors in certain product categories.

Government spending in Q3 expanded significantly in both current and capital expenditures after the Budget Act of 2024 was enacted, which helped improve private investment. However, tourism receipts and private consumption declined slightly. Manufacturing production also decreased, particularly in the automotive sector.