Thai economy still in recovery phase, BOT says
The Thai economy remained on the path to recovery during the last quarter of this year, the Bank of Thailand (BOT) announced, explaining that a steady recovery had been observed in October and November driven mainly by private consumption and tourism.
The main driving force is domestic demand, including private consumption and private sector investments, the BOT'’s assistant governor of Corporate Relations Chayawadee Chaianan said, noting that the service sector had slowed due to the decrease in the number of Thai and foreign tourists.
In October, the indicators for private consumption expanded from the previous month by 1.7%, increasing in almost every major category of goods, except for spending on services which decreased, particularly in the hotel and restaurant sectors, in line with the decrease in both Thai and foreign tourist numbers. The increased consumption was supported by employment and improved consumer confidence.
Meanwhile, the private investment indicators increased from the previous month by 1.4%, with increased investments in machinery and equipment sales in the country, imports of communication devices, and a sustained number of commercial vehicle registrations. Construction investments also saw an increase based on the areas permitted for construction and sales of construction materials.
The expanded consumption in October was supported by improved consumer confidence, primarily the result of the government's cost of living assistance measures including reduced electricity and diesel prices. However, consumers remained concerned about the high cost of living and the global geopolitical and financial situations, Chayawadee noted.
The number of foreign tourists decreased by 1.4% from the previous month, mainly due to the reduction in Russian arrivals after an earlier rush and Malaysian tourists postponing travel to wait for special holidays in November.
However, tourist numbers from some countries remained steady, with both Chinese visitors taking advantage of visa exemptions, and European groups, especially from the United Kingdom and Germany, continuing to arrive. Tourism income slowed from the previous month, in line with the reduced number of tourists and decreased hotel occupancy rates. Overall, foreign tourists for the first 10 months amounted to 22.2 million people.
The value of non-gold exports decreased by 1.4% from the previous month, declining in several categories due to slower recovery in foreign markets. Among these were jewellery exports to Hong Kong following an earlier trade exhibition, electronics from reduced exports of hard disk drives as per delivery cycles, and electronic circuit boards from decreased exports to the United States and Hong Kong. Agricultural products also saw decreased exports particularly of fruit to China. However, some categories of exports increased, such as car exports to Australia and petroleum to ASEAN.
The value of non-gold imports also saw a decrease over the previous month, mainly in fuel imports, especially crude oil, consumer goods, electric cars and capital goods. Nonetheless, raw material and intermediate goods imports excluding fuel continued to increase due to the importance of electronic equipment parts.
Industrial production indices decreased in several categories after earlier production acceleration, including food and beverages, sugar production, reduced hard disk drive production according to product delivery cycles, and chemicals related to plastics and preliminary rubber production.
However, petroleum production improved following the resumption of operations after refinery maintenance closures the previous month.
Chayawadee mentioned that public sector spending, excluding transfer payments, decreased compared to the same period in 2022 as a result of a decline in government investment and delays in budget reviews. Meanwhile, regular government spending expanded, in line with expenditure on allowances, bonuses, pensions, and healthcare costs for government employees, and spending from educational agencies on infrastructure and public services.
The stability of the Thai economy at present indicates that the overall inflation rate has decreased in the energy and fresh food categories, with energy decreasing due to the government's diesel price reduction and the lowered gasoline price following global oil market prices.
Underlying inflation remains stable, with labour market conditions continuing to recover as reflected in the increased number of social security registrants. The trade balance, however, swung towards a deficit due to important market impacts, both from international tourism recovery and potential energy price increases.
Chayawadee concluded that economic activities in Thailand would still largely come from the private consumption and tourism sectors for the remainder of the year, adding that the recovery of exports would require continued monitoring, along with the impact of geopolitics on production and agricultural commodity prices as well as energy prices.
