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21 Aug 2023

Thai Economy

Thai economy grew less than expected at 1.8 percent YoY in 2Q23 Full-year growth for 2023 is expected to be in a range of 3.0-3.5 percent (Business Brief No.4014 Full Ed.)


        The Thai economy grew less than expected at 1.8 percent YoY in 2Q23. After seasonal adjustment, it expanded at only 0.2 percent QoQ. For 1H23, the country’s economy saw growth of 2.2 percent YoY. Thailand’s 2Q23 GDP growth was pressured mainly by a decline in exports, government spending and public investment. Plus, private investment expanded at a slower pace, in line with the export sector and business sentiment that has been affected by uncertainties surrounding the new government’s formation. However, the Thai economy in 2Q23 continued to see support from the recovery in tourism and ongoing expansion in private consumption, particularly among middle-high income households.

        Looking into 2H23, the sluggish global economy, persistent drought and the slowdown in consumer spending are expected to be factors pressuring the country's economic expansion. KResearch thus expects that the full-year 2023 Thai economy may grow less than the previous projection of 3.7 percent YoY, falling to the forecast range of 3.0-3.5 percent. We anticipate that Thai exports in 2023 could record a significant contraction compared to the prior estimate, due to the slower-than-expected recovery of the Chinese economy. Moreover, the drought caused by the El Niño phenomenon is likely to impact agricultural production and income. Meanwhile, private spending momentum is expected to decline, in line with decreased farm income and the persistently high cost of living and household debt, coupled with increased financial costs. If the formation of a new government could be expedited, it is likely to have a positive impact on the economy during the remainder of the year. Additionally, the ongoing recovery in the tourism sector remains a key driver of the Thai economy in 2H23, despite the risk of fewer-than-expected Chinese tourists. KResearch estimates that the 2023 Thai economy will expand by 3.0-3.5 percent, which is less than the previous forecast of 3.7 percent YoY. Amid numerous challenges, the Thai economy is expected to experience less-than-expected growth in 2H23.

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Thai Economy