BANGKOK — Thailand’s central bank highlights “tourism and money transfer measures” as impetus for economic recovery in October
The Bank of Thailand (BOT) reports that the Thai economy showed signs of recovery in October 2024 compared to the previous month, driven by increased tourism receipts and improved private consumption. The positive impact of the government’s cash transfer measure of 10,000 baht also contributed to this.
Looking ahead, the BOT expects continued economic momentum in the tourism and service sectors, but advises that geopolitical tensions, US trade policy and measures to stimulate the domestic economy should be closely monitored.
On November 29, Ms. Chayawadee Chai-Anant, Deputy Governor of Corporate Relations Line and BOT spokesperson, said that Thailand’s economy improved in October due to continued growth in tourism revenue and private consumption. The cash transfer measure of 10,000 baht played an important role in this recovery, as did the increase in trade activities.
Industrial production also increased, driven by exports (excluding automobiles) and stronger domestic demand. Government spending increased in both current and capital expenditure. However, some sectors remained sluggish due to structural challenges and lower competitiveness.
The number of foreign tourists increased by 2.8 percent month-on-month in October 2024, reaching 2.7 million, compared to 2.5 million in September. While tourist arrivals from Malaysia and China declined due to domestic factors, arrivals from South Korea, Singapore and long-haul markets such as the US, UK and Germany continued to grow. This led to seasonally adjusted growth in tourism receipts, supported by longer stays and slightly higher daily spending by European visitors.
Seasonally adjusted private consumption rose by 0.8 percent in all categories compared to the previous month. The cash transfer of 10,000 baht was a key driver, leading to higher spending in:
- Non-durable goods, such as fuel, consumer products, beverages, snacks, and tobacco.
- Durable goods, such as motorcycles and personal vehicles.
- Semi-durable goods, particularly imported textiles and clothing, including apparel.
- Services, particularly in the hotel and restaurant sectors, aligning with increased domestic and international tourism spending.
The consumer confidence index also rose slightly, supported by government stimulus measures and reduced concerns about flooding.
Seasonally adjusted private investment rose by 4.5 percent month-on-month across key sectors. Machinery and equipment investment grew due to:
- Increased imports of capital goods, particularly general-purpose machinery, electric motors, and vessels.
- Higher domestic sales of machinery and equipment.
- An uptick in commercial vehicle registrations, including tractors.
Construction investment increased due to higher sales of construction materials (e.g., cement, concrete slabs, and bricks) and improved construction permits for residential and industrial purposes.
Government expenditure (excluding transfers) expanded year-on-year, driven by both current and investment spending. Current spending rose due to disbursements for education-related expenses, pensions, and healthcare for civil servants. Investment spending increased significantly, with disbursements for transportation and education projects. State enterprise investment also grew, particularly in communications and utilities projects.
The inflation rate rose from 0.61 percent in the previous month to 0.83 percent, mainly due to the low base effect of last year’s government subsidies in the energy sector. Fresh food prices declined, especially for vegetables, as supply recovered after the flooding. Core inflation remained stable, with rising food prices offset by lower prices for personal items.
As in the previous month, the current account surplus amounted to 0.7 billion dollars. While the trade surplus narrowed to 1.4 billion dollars due to rising imports, the deficit in services, income and transfers narrowed due to lower profits.
The Thai baht weakened against the U.S. dollar in October 2024 due to uncertainty surrounding the Federal Reserve’s interest rate cuts and upcoming U.S. elections. The baht continued to depreciate in November following the U.S. presidential election results, as market expectations suggested that Donald Trump’s proposed economic stimulus policies might sustain high inflation, limiting the Fed’s ability to lower interest rates as previously anticipated.
Economic activity is expected to gain further momentum through tourism and the service sector, while exports and industrial production will gradually recover. However, some sectors are facing persistent structural and competitive challenges, leaving corporate and household incomes vulnerable in certain segments.
Key issues to watch include:
- Geopolitical tensions and US trade policy, which may impact exports and production.
- The effectiveness of government stimulus measures.
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