Tourism and private consumption boost Thailand’s economy: BOT

 

The Thai economy has demonstrated positive momentum over the past month, propelled by a significant surge in tourism revenue and robust private consumption, partly fuelled by the government's 10,000-baht cash handout scheme, according to the Bank of Thailand (BOT) on Friday.

 

This economic upturn is characterised by increased trade activities and a rebound in manufacturing production, driven by improved exports — excluding automobiles — and stronger domestic demand. Government spending has expanded, reflecting both current and investment expenditures. However, some sectors continue to face challenges due to persistent structural issues, the BOT said.

 

Economic stability indicators show a rise in headline inflation compared to the previous month, primarily attributed to increased energy prices. This increase stems from last year's low base effects following government subsidies. 

 

In contrast, fresh food prices have declined, with vegetable costs dropping due to improved production after the recent flooding. Core inflation remains stable, as higher food prices were counterbalanced by decreasing non-food prices, the central bank said.

 

 

 

Trade and current account

The current account surplus remained consistent with the previous month, though the trade surplus narrowed due to higher imports. Deficits in services, income, and transfers decreased, linked to a reduction in profit repatriation by foreign firms following the previous month's surge. 

 

The labour market has experienced a downturn, particularly in non-tourism service sectors like trade and construction, as evidenced by rising unemployment claims.

 

 

 

 

Tourism and consumption

October saw stable foreign tourist numbers, with notable increases from South Korea, Singapore, and long-haul markets including the US, UK and Germany. This trend contributed to rising tourism revenue. 

 

Private consumption grew across all categories, driven by the government's stimulus programme, with significant increases in non-durables, durables, and services, especially in hotels and restaurants.

 

 

 

Manufacturing and exports

The manufacturing production index rose, powered by chemicals, electrical appliances, and food sectors, though petroleum production declined due to high inventory levels. 

 

Merchandise exports, excluding gold, remained steady, supported by machinery and electronics exports, while agricultural exports faced challenges.

 

 

 

Financial landscape

Corporate financing showed mixed signals, with outstanding funding plateauing due to reduced bond issuance. The equity market saw increased business financing, particularly in transportation sectors. 

 

The baht depreciated against the US dollar in October 2024, influenced by uncertainties surrounding Federal Reserve policy and the November US elections.

 

 

Challenges and outlook

While the Thai economy shows resilience, challenges persist. Structural issues in trade and construction continue to impact the labour market. Global economic uncertainties and potential policy shifts in major economies could further influence Thailand's export-oriented industries, the central bank said.

 

The BOT said it remained committed to closely monitoring economic developments and would adjust monetary policy to support sustainable economic growth and maintain price stability.