Growth Disappoints, Rising Pressure On BoT

Thailand’s Q4 GDP print was disappointing showing the economy contracted 0.6% q/q sa to be up only 1.7% y/y in the final quarter of the year. 2023 growth slowed to 1.9% from 2022’s 2.6%. The economy was driven by private consumption and exports as government spending contracted and import growth improved. The government was already putting pressure on the Bank of Thailand to cut rates and that increased today with the NESDC saying monetary policy should boost the economy.

• BoT officials have pushed back against pressure saying that the economy’s underperformance is due to structural issues that monetary policy can’t affect and that the government needs to implement reform. There will be increased easing speculation ahead of the next BoT meeting on April 10.

Source: MNI - Market News/Refinitiv

• NESDC expects GDP growth of 2.2-3.2% in 2024 and that is to be driven by robust consumption but it is forecast to slow to 3% though.
• Domestic demand growth slowed in Q4 to 3.7% y/y from 4.1%. Private consumption growth remained robust rising 7.4% y/y slightly slower than Q3’s 7.9%. 2023 saw a pickup in growth to 7.1% from 6.2%.
• There is still considerable uncertainty re the implementation of the digital wallet scheme and if it will occur this year. It is expected to boost consumption once in place.
• Capex continued to be weak in Q4 falling 0.4% y/y after rising 1.5% y/y. Reform is needed to boost investment. There was an inventory build in Q4 but stocks detracted 0.7pp from annual growth.
• Government spending contracted 3% y/y an increase from Q3’s -5.0%. It is forecast to rise 1.5% y/y this year.
• Net exports continued to make a positive annual contribution to growth but significantly less than in Q3 as import growth picked up to +4% y/y from -9.4%. Exports rose 4.9% y/y up from 1.1%. NESDC projects a trade surplus in 2024 with the current account surplus at 1.4% of GDP.

Source: MNI - Market News/Refinitiv