Thailand’s economy expanded by just 1.9% in 2023, slower than expected, driven by private consumption and tourism. NESDC projects growth of 2.7% in 2024, suggesting an interest rate cut.
Thailand’s Economic Performance in 2023
The Office of the National Economic and Social Development Council (NESDC) has reported that Thailand’s economy grew by 1.9% in 2023, falling short of expectations due to various factors. Private consumption, tourism, and agriculture were the main drivers of growth, while manufacturing, public investment, and export of goods acted as drags on the economy.
Interest Rate Considerations
Given the slower-than-expected growth, there is now a case for a possible interest rate cut by the Bank of Thailand during its next policy review. The current key rate is 2.50%, the highest in over a decade, with two members of the bank advocating for a rate reduction to alleviate financial pressures on households and businesses.
Outlook for 2024
Looking ahead to 2024, the NESDC projects a growth rate range of 2.2% to 3.2%, lower than the initial projection of 2.7%. The economy is expected to be supported by the recovery of export of goods, private consumption, private investment, and tourism. Headline inflation is estimated to range from 0.9% to 1.9%, with a projected current account surplus of 1.4% of GDP.
