Robust GDP Outcome Points To Further BoT Rate Hikes

Seasonally-adjusted Q3 real GDP in Thailand came in stronger than expected rising 1.2% q/q after 0.7% in Q2, as tourists return after the pandemic. It rose 4.5% y/y, which was in line with projections. This is consistent with the Bank of Thailand’s view that the economy is recovering and as a result further tightening lies ahead. The BoT was one of the last in the region to begin hiking and its benchmark rate is still only 1%. The next meeting is held on November 30.

• The National Economic and Social Development Council (NESDC) is forecasting growth of 3% - 4% in 2023, so it could exceed 2022’s projected 3.2% outcome. It expects 2023 tourist numbers to more than double from 2022, as post-pandemic travel is unlikely to be heavily impacted by the global economic slowdown. Inflation however is projected to moderate in 2023 to 2.5% - 3.5% from 6.3% in 2022.
• Consumption growth strengthened to 9% y/y from 7.1% in Q2, its highest in over 3 years. Investment was also robust at 5.2% y/y but government spending fell 0.6% y/y. Import growth remained elevated at 8.2% y/y, reflecting robust domestic demand.
• Growth in exports of goods and services improved further to 9.5% y/y from 8.5%. This was driven solely by tourism as services exports soared 87% y/y due to travellers returning after the pandemic, whereas goods exports only rose 2.7% y/y. Services exports should continue to be a strong contributor in 2023.