Softer factory output and tourist arrivals slowed Thailand’s economy more than expected in the third quarter, with more weakness projected at the end of this year and into next.
(Nov 17): Softer factory output and tourist arrivals slowed Thailand’s economy more than expected in the third quarter, with more weakness projected at the end of this year and into next.
Gross domestic product in the three months through September shrank 0.6% from the previous quarter, the National Economic and Social Development Council said Monday (Nov 17). That’s lower than expectations for a 0.3% contraction in a Bloomberg News survey.
It’s the first drop in quarterly output since the end of 2022 and the deepest decrease since mid-2021.
Compared to the same period last year, the economy grew 1.2% in the third quarter, missing the 1.6% median estimate and decelerating from 2.8% in the previous quarter. The agency expects output to slow further to 0.6% on an annual basis in the final three months of the year.
The council also sees growth potentially as slow as 1.2% next year, down from an expected 2% this year.
All key economic engines of Thailand sputtered last quarter, with slowdowns in exports, manufacturing production, construction, government expenditures and tourism services, according to the agency.
The numbers underscored an economy bending under the weight of US tariffs, a tougher export environment, the fall of the previous government and a tourism downturn. Thailand also follows the Philippines in missing third-quarter growth estimates.
Prime Minister Anutin Charnvirakul, the third Thai premier in two years, has launched a US$1.36 billion consumption stimulus programme and the new Bank of Thailand chief has also vowed to address the nation’s massive pile of household debt.
NESDC chief Onfa Vejjajiva said she doesn’t expect a technical recession, where the economy shrinks for two straight quarters, because tourism and private consumption will likely help offset a drag from exports at the end of this year.
The Thai economy is now projected to expand by 2% this year, from 2.5% in 2024. Headline inflation, which has been negative for the past seven months, is expected to average minus 0.2% this year and the current account surplus is seen reaching 2.8% of GDP.
The output next year could decelerate again, with growth anticipated within the range of 1.2%-2.2%.
The pace of growth will hinge on the outcome of Thailand’s tariff negotiations with the US, which are now on shaky ground following the suspension of a peace deal brokered by US President Donald Trump.