BANGKOK: Thailand’s economy unexpectedly contracted in the fourth quarter of 2023 from the third, adding to pressure for an interest rate cut as risks grow for the tourism-driven economy from high household debt and China’s slowdown.
Gross domestic product (GDP) fell 0.6 per cent in the October to December quarter on a seasonally adjusted basis, the planning agency said on Monday (Feb 19), down from a revised 0.6 per cent rise in the third quarter. The first quarterly contraction in a year compares with a 0.1 per cent rise forecast in a Reuters poll.
From a year earlier, the economy grew 1.7 per cent, slightly faster than a revised 1.4 per cent growth in the third quarter but slower than a forecast 2.5 per cent expansion.
Slowing economic momentum raises the chances of a rate cut at the central bank’s next policy review on Apr 10, after it left this month the key rate steady at 2.50 per cent, the highest in more than a decade, in a split vote. Two dissenters favoured a rate reduction.
State planning agency chief Danucha Pichayanan told a press conference that monetary policy should support the economy and a quick rate cut would help.
Prime Minister Srettha Thavisin and his government have repeatedly urged the central bank to cut interest rates, saying they are hurting consumers and businesses and that the economy is in crisis.
The Bank of Thailand (BOT) has said rate cuts will do little to revive Southeast Asia’s second-biggest economy if structural issues persist.
The economy expanded 1.9 per cent in 2023, slower than expected, and less than a revised 2.5 per cent in 2022.
For 2024, the state planning agency expects growth to come in between 2.2 per cent and 3.2 per cent, lower than the 2.7 per cent to 3.7 per cent it projected in November.
Exports in 2024 were expected to grow 2.9 per cent, lower than a previous estimate, while headline inflation was seen at 0.9 per cent to 1.9 per cent, compared with the central bank’s target range of 1 per cent to 3 per cent.
The economy should not contract in the first quarter of 2024 if exports recover, the agency said.
