Q4 GDP Contraction An Additional Headwind

USD/THB is holding close to session highs, last around 34.56/57. Like the broader ADXY index, this has pretty much eroded THB gains for the year. In terms of the technicals we are close to the 100 day EMA at 34.665, while the 200-day sits slightly highs at 34.86. The pair also spent time oscillating around the 35.00 level in early Dec last year.

• Q4 GDP data was disappointing with growth falling -1.5% in q/q terms (+0.6% was forecast). This dragged y/y growth down to 1.4% versus 3.6% expected (4.6% prior). Weaker exports was the main driver of this result, along with lower government expenditure.
• The NESDC (National Economic and Social Development Council) stated it doesn't expect a technical recession, while expecting 2023 growth to come in between 2.7-3.7%. Note the consensus expects growth of 3.7% for this year, so the mid point of the NESDC range is slightly lower than this.
• The body did nudge its 2023 forecast higher for tourist arrivals to 28 million, although the Thai PM has hopes of 30m arrivals.
• Whilst the Q4 data is backward looking, it may leave sensitivity around baht levels higher, given weakness was reflected in exports.