Thailand’s GDP growth for Q2 2023, at 1.8% year-on-year, proved weaker than anticipated. This outcome has prompted a downward revision in the annual growth projection for the year, from 3.0% to 2.8%. The primary drivers behind this adjustment include elevated interest rates, political uncertainties, and subdued external demand.
The presence of tight credit conditions, coupled with high levels of household debt and elevated interest rates, is expected to exert a dampening effect on both domestic activity and consumption within Thailand. Consequently, this is anticipated to impede the overall pace of economic expansion.
Despite observable signs of recovery in Thailand’s tourism sector, the broader economic resurgence of the country is expected to remain lackluster. The persistent challenges of constrained credit conditions, political ambiguity, and a weakened global demand environment collectively contribute to this subdued outlook.
Thailand contends with various challenges, namely elevated interest rates, political uncertainties, and weakened external demand. Nonetheless, there is a measure of relief expected from the recovering tourism sector. Factors such as tight credit conditions, political developments, and a deceleration in the worldwide economy all contribute to the deceleration of economic growth.
On a positive note, there is an expectation that Thailand’s tourism industry will continue to regain strength, possibly reaching pre-pandemic levels by early 2024. Upside risks to the growth projection are contingent upon global economic performance surpassing predictions and the tourism sector outperforming expectations.
The economic recovery in Thailand demonstrated a softened trajectory in Q2 2023.
Official data released on August 21 revealed a decrease in real GDP growth from 2.6% year-on-year in Q1 2023 to 1.8% in Q2 2023. This figure notably fell below the consensus estimate of 3.1% and our initial growth forecast of 2.9%. Furthermore, indicating the extent of the deceleration, the economy expanded by a modest 0.2% on a seasonally adjusted quarter-on-quarter basis. In light of these latest growth statistics and the persistently challenging economic circumstances, our full-year growth projection for 2023 has been revised downward from 3.0% to 2.8%. This revised projection is below both the consensus expectation of 3.6% and the average of 3.6% recorded between 2010 and 2019.
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