The Bank of Thailand (BoT) has announced that the country’s GDP growth in the first quarter of 2023 was stronger than expected, thanks to the continued recovery of private consumption and tourism.
According to the BoT’s assistant governor Chayawadee Chai-Anant, the economy improved on both a quarterly and yearly basis, despite a decline in merchandise exports and manufacturing production. The BoT is awaiting official growth figures from the National Economic and Social Development Council.
In the first quarter of 2023, the Thai economy continued to improve from the previous quarter, mainly driven by improvement in both foreign and Thai tourists which bolstered services and private consumption. The value of merchandise export increased in line with manufacturing production and private investment.
The BoT reported that the export value dropped by 2.2% year-on-year in March, following a 1.8% fall in February, with a 2.4% contraction for the first quarter. However, exports picked up in April and are expected to see a gradual improvement in the remaining months, in line with global demand. In contrast, private consumption grew by 6% year-on-year in March, rising from 3.9% in February. For the first quarter, private consumption grew by 4.7%.
The service sector also showed signs of improvement, as domestic and foreign tourist numbers increased. Foreign tourist arrivals as of April 25 were 8 million, in line with the BoT’s forecast and trends. In March, offshore travellers tallied 2.2 million, rising from 2.1 million the previous month, while the figure in the first quarter was 6.4 million. “The tourism recovery also supported the labour market in the service and tourism sectors. Employment in these sectors increased to a level close to the pre-pandemic period,” said Ms Chayawadee.
The tourism rebound also supported tourism income and the country’s current account. The current account registered a surplus of US$4.8 billion in March, rising from $1.3 billion the previous month, with a surplus of $4 billion for the first quarter. Headline inflation declined in both energy and raw food categories because of a high base last year, as well as a decline in raw food prices as supply increased. Core inflation also decreased, especially in the processed food category, because of a high base last year.
In terms of exchange rates, the baht against the US dollar depreciated on average following a shift in market expectations towards a tighter monetary policy by the US Federal Reserve in early March. During the second half of the month, the baht became more volatile against the greenback based on concerns over financial institution problems in the US and Europe.