The Bank of Thailand (BoT) predicts gross domestic product (GDP) growth of 3.7% in the final quarter this year, attributed to the low-base effect amid a continued recovery driven by private consumption and tourism.
The central bank forecasts 2023 GDP growth of 2.4%.
The high growth outlook for the last quarter is the result of a low-base effect year-on-year, said Chayawadee Chai-anant, assistant governor of the corporate relations group at the BoT.
However, third-quarter GDP growth was lower than the bank’s estimate because of a slowdown in manufacturing, in line with sluggish external demand, she said.
The National Economic and Social Development Council (NESDC) announced third-quarter GDP growth of 1.5%, down from 1.8% in the previous quarter.
The central bank’s “Economic and Monetary Conditions for October 2023” report noted the economy continued to recover based on domestic demand, driven by private consumption and investment.
However, activities in the service sector slowed as the number of both domestic and foreign tourists eased.
In October, the number of foreign arrivals, after seasonal adjustment, was 2.2 million, down by 1.4% from the previous month.
The decline was attributed to fewer Russian tourists after a peak in the preceding periods, while Malaysian tourists postponed their trips to November because of additional holidays for the month.
Tourist arrivals from other countries continued to increase, especially from China because of the visa exemption scheme, and European Union (EU) members, namely the United Kingdom and Germany.
Tourist expenditure softened in line with fewer arrivals and a lower occupancy rate, Ms Chayawadee said.
From January to October, offshore tourists totalled 22.2 million. The central bank forecast 28.3 million for the whole year.
Private consumption indicators, after seasonal adjustment, rose by 7.3% year-on-year and 1.7% month-on-month in most categories, except services, which weakened as a result of lower spending in the hotel and restaurant category.
She said the decline was in line with the fewer domestic and foreign tourists.
The increase in consumption continued to be supported by improvements in employment and consumer confidence, noted the report.
However, the value of merchandise exports (excluding gold and after seasonal adjustment) declined by 1.4% from the previous month.
Ms Chayawadee said the baht depreciated against the US dollar in October based on speculation the United States Federal Reserve would be more aggressive with its rate hikes, in conjunction with global uncertainties from the conflict in the Middle East.
However, the baht has recently rebounded against the dollar, which is weakening as the market is pricing in a static US rate based on softening US growth.