In an unexpected turn, the Thai economy experienced a slower expansion than initially anticipated during the second quarter of the year, as revealed by data unveiled on Monday, August 21st. The country’s strength in the tourism sector served as a crucial buffer against the backdrop of weakened exports amidst a global demand deceleration.
As a response to the sluggish export performance, the government has adjusted its 2023 gross domestic product (GDP) growth forecast to a range of 2.5% to 3.0%, down from the previous projection of 2.7% to 3.7%.
According to the National Economic and Social Development Council (NESDC), which monitors the pulse of Southeast Asia’s second-largest economy, the growth for the April-June period expanded by 1.8% compared to the same period a year earlier. This figure fell significantly below the 3.1% expansion rate that economists had anticipated in a Reuters poll.
The first quarter had witnessed a 2.7% year-on-year rise in the GDP, highlighting a sturdier performance compared to the subsequent quarter.
Breaking down the data on a quarterly basis, the seasonally adjusted GDP in the June quarter saw a mere 0.2% increase, a stark contrast to the projected rise of 1.2%.
A retrospective adjustment was made to the first-quarter GDP, revising the initial 1.9% increase to a more modest 1.7%.
The struggle stemming from diminished global demand, which adversely impacted exports, was cushioned by the robustness of Thailand’s tourism sector and the growth in private consumption.
Despite the headwinds, the agency responsible for economic development, NESDC, upheld its prediction of 28 million foreign tourist arrivals for the year. In the trade sector, the outlook for exports is less optimistic, now projecting a 1.8% decline in 2023 as opposed to the earlier forecast of a 1.6% fall.
Exports, a pivotal driving force behind the nation’s economic growth, have faced a consistent contraction since October 2022, predominantly due to sluggish global demand, with China’s slowdown, a significant trading partner for Thailand, exerting notable pressure.
