Real GDP finally exceeded its pre-pandemic level, though was still sharply lower from where it could have been without pandemic-related scarring.

Real GDP growth improved to 2.7% y/y in Q1 2023 from 1.4% in Q4 2022, with quarterly momentum also picking up to 1.9% q/q seasonally adjusted (sa) after contracting 1.1% in Q4. Private consumption, fixed investment, and exports all contributed to the rebound.

The rebound in Q1 was stronger-than-expected for both private consumption and fixed investment, with positive spill overs from the tourism sector. But private credit growth has eased in recent months, pointing to more weakness ahead for domestic demand. Moreover, we see growing downside risks to our medium-term investment forecast for Thailand in the absence of a new impetus to drive above-trend growth.

An above-consensus 2.7% y/y rise in Q1 GDP corroborates our relatively optimistic growth outlook for Thailand in 2023 and 2024.

The external outlook for Thailand looks relatively bright thanks to the ongoing tourism recovery, despite the downturn in the global manufacturing cycle. The labour-intensive tourism sector will also support income, though we think stronger-than-expected growth in domestic demand in Q1 will soften in the coming quarters. Overall, we maintain our above-consensus growth forecasts at 3.8% for 2023 and at 4.5% for 2024.

Excerpt from Oxford Business Group update

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