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Thailand GDP Q2 2023

Thailand: GDP growth loses steam in Q2

GDP growth moderated to 1.8% year on year in the second quarter, from a downwardly revised 2.6% in the first quarter. The reading came in well below market expectations. On a seasonally adjusted quarter-on-quarter basis, economic growth slowed markedly to 0.2% in Q2, from the previous period’s 1.7% expansion.

Fixed investment growth fell to 0.4% in Q2, marking the worst reading since Q2 2022 (Q1: +3.1% yoy), likely as investment decisions were discouraged by higher interest rates and global headwinds. Meanwhile, private consumption increased 7.8% in the second quarter, which was above the first quarter’s 5.8% expansion, on the back of moderating inflation. Lastly, public consumption slid at a slower rate of 4.3% in Q2 (Q1: -6.3% yoy).

On the external front, exports of goods and services growth slowed to 0.7% in Q2 (Q1: +2.1% yoy), stifled by weak global demand. Meanwhile, imports of goods and services contracted at a steeper pace of 2.4% in Q2 (Q1: -0.9% yoy), weighed down by cooling domestic demand dynamics.

Commenting on the implications of subdued growth and declining inflation for monetary policy ahead, Enrico Tanuwidjaja, economist at UOB, stated:

“Real interest rate has now turned positive and, should Bank of Thailand undertake further tightening, that could wean off the much-needed support towards continued Thai economic recovery.”

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