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THAILAND: Private Spending Supported Despite Forecasts for Slowdown

THAILAND
GlobalEM BulletAPACEmerging Market NewsBulletMarketsFixed Income BulletsRegionThailand

Q3 real private consumption slowed to 3.4% y/y from 4.9%, the lowest since Q1 2022. The NESDC is forecasting it to grow 4.8% this year, revised up 0.3pp, and then slow to 3.0% in 2025. This is despite the Digital Wallet Scheme which the government expects to boost growth significantly. Slowing consumption though has prompted it to meet on Tuesday to discuss further stimulus measures. Strength in other areas of the economy, including public spending and exports, is likely to keep the Bank of Thailand on hold in December.

  • The first phase of the Digital Wallet Scheme started at the end of September and further payments are scheduled to be made through Q4. Currently the programme is worth THB 45bn or 0.25% of 2023 GDP and is expected to impact Q4 2024 and Q1 2025 spending. The government estimates it will increase GDP growth by 1.2-1.8pp, but many believe this is too high.
  • Consumer confidence has been trending lower since it peaked in February but improved slightly in October rising to 56 from 55.3, below the average Q3 level, and the economic assessment to 49.6 from 48.8. The start of Q4 is suggesting that real consumption growth is likely to slow further. 

Thailand real consumption y/y% vs consumer confidence

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Q3 real private consumption slowed to 3.4% y/y from 4.9%, the lowest since Q1 2022. The NESDC is forecasting it to grow 4.8% this year, revised up 0.3pp, and then slow to 3.0% in 2025. This is despite the Digital Wallet Scheme which the government expects to boost growth significantly. Slowing consumption though has prompted it to meet on Tuesday to discuss further stimulus measures. Strength in other areas of the economy, including public spending and exports, is likely to keep the Bank of Thailand on hold in December.

  • The first phase of the Digital Wallet Scheme started at the end of September and further payments are scheduled to be made through Q4. Currently the programme is worth THB 45bn or 0.25% of 2023 GDP and is expected to impact Q4 2024 and Q1 2025 spending. The government estimates it will increase GDP growth by 1.2-1.8pp, but many believe this is too high.
  • Consumer confidence has been trending lower since it peaked in February but improved slightly in October rising to 56 from 55.3, below the average Q3 level, and the economic assessment to 49.6 from 48.8. The start of Q4 is suggesting that real consumption growth is likely to slow further. 

Thailand real consumption y/y% vs consumer confidence

Keep reading...Show less