The Thailand economy grew at a slower pace than economists estimated last quarter. The faster inflation in 14 years likely weighed on sentiment and offset gains from the return of foreign tourists.
Gross domestic product rose 2.5% in April-June from a year earlier. The National Council for Economic and Social Development said on Monday. Below is the median estimate of a 3.1% expansion in a Bloomberg survey. Production expanded 0.7% compared to the first quarter versus a median growth estimate of 0.9%.
Officials see year-round growth in a range of 2.7% to 3.2%, slower than the 3.3% pace seen by Prime Minister Prayuth Chan-Ocha earlier this month. That puts Thailand on track for the slowest expansion in the Southeast Asian region in 2022. It struggled with the fastest inflation since 2008.
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The baht fell further for more than three weeks after growth was weaker than estimated. The currency fell 0.5% to 35.516 against the dollar on Monday morning. The agency sees the baht averaging 34.5-35.5 per dollar this year. The benchmark stock index had little change at the opening.
Thailand’s central bank last week raised borrowing costs by a quarter-point. The first increase since 2018, to rein in price gains and support the baht. The authorities also promised to maintain the pace of gradual changes so as not to stifle the economy’s recovery momentum.
Any escalation of the war in Ukraine remains a key risk to Thailand’s recovery. Danucha Pichayanan, NESDC secretary-general, said after the data was released. Geopolitical tensions have spread to Asia with China and Taiwan. It may lead to supply disruptions in the automotive and electronics sectors, as Thailand imports 29% of Taiwan’s semiconductors, he said.
Still, the government’s forecast for foreign visitor arrivals to return to levels of 30 million next year from about 10 million this year bodes well for the economy where tourism accounts for more than 10% of GDP.
