Thailand Economic Outlook
Annual GDP growth accelerated and beat market expectations in the first quarter. A recovering tourism industry was behind the good economic performance, which was also supported by resilient household spending. Momentum should be strengthening in the second quarter, as suggested by consumer confidence increasing, the manufacturing PMI improving and inflation slowing in April. Meanwhile, elections held on 14 May delivered an unexpected result. The progressive Move Forward Party came in first in terms of seats and vote share and Pheu Thai—the main opposition party—second, dealing a blow to governing military-backed Prime Minister Prayuth Chan-o-cha. The two opposition parties already declared that they will sign a deal to form a new government. That said, they could face challenges to elect a prime minister, which would require the agreement of the establishment-controlled Senate.
Inflation fell to 2.7% in April, following March’s 2.8%, thus remaining within the Bank of Thailand’s 1.0–3.0% target. Inflation should ease further this year, pushed down by higher interest rates. Volatile energy and food prices and China’s economic reopening pose risks.