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NESDB Reports Slower Q2/2023 GDP Growth of 1.8% in Thailand due to Export Contraction

The National Economic and Social Development Council (NESDB) in Thailand has unveiled the second-quarter gross domestic product (GDP) figures for 2023, revealing a growth rate of 1.8%. This comes in below market expectations of 3.0% YoY, showing a deceleration from the 2.6% growth witnessed in the first quarter.

The Office of the National Economic and Social Development Council (NESDB) has illuminated the economic landscape of Thailand, shedding light on the performance of the gross domestic product during the second quarter of 2023. With a growth rate of 1.8%, this figure has fallen short of market projections which anticipated a more robust 3.0% year-on-year expansion. This marks a noticeable slowdown from the growth rate of 2.6% observed during the preceding quarter.

A pivotal driver behind this performance has been the resilient momentum of household expenditure, maintaining a vigorous growth trajectory. While total investment has demonstrated growth, albeit at a more restrained pace, government spending has continued to witness a decline. This cline can be attributed to the high baseline set by government expenditures related to public health initiatives in 2022. The export sector, a crucial component of the Thai economy, has faced headwinds. The export of goods has notably contracted, while services like pick-up services have expanded due to an increasing influx of foreign tourists.

In response to these developments, the NESDB has revised its growth forecast for the Thai economy for the current year. The new projected GDP growth range is between 2.5% and 3.0%, a reduction from the previous estimate of 2.7% to 3.7%. The recalibration is a direct consequence of the prevailing challenges in the global economy, which have hampered the recovery of Thailand’s main trading partners. Furthermore, the NESDB has adjusted down its projection for Thai exports this year to -1.8%, from the prior estimation of -1.6%.

Simultaneously, the anticipated headline inflation for the year has been adjusted downwards to a range of 1.7% to 2.2%, compared to the previous estimate of 2.5% to 3.5%. This reflects the ongoing trend of inflation showing a continuous deceleration.

The NESDB has indicated that the Thai economy is expected to draw momentum from private consumption and tourism in the second half of the year. Despite a projection of 28 million foreign tourists, unchanged from prior estimates, income generated from tourism is expected to be lower at 1.03 trillion baht, down from the previous estimate of 1.27 trillion baht.

The Secretary General of NESDB has also identified key risk factors for 2023. These include political conditions that might influence the economic environment, a global economy experiencing a greater-than-anticipated slowdown, and the potential for volatility in global financial markets. Additionally, the challenge of high levels of household and business debt, compounded by increasing interest burdens, and the variable impact of climate on agricultural productivity remain significant considerations.

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