Thai economy slowed down in March 2024 (BoT)

The Thai economy slowed in March 2024, with softening domestic demand and tourism. Despite signs of improvement in the first quarter, growth is expected to remain low year-on-year, driven by tourism and private investment, while exports and manufacturing lag due to weak global demand. Headline inflation improved, but the current account surplus decreased, and the labor market showed slight improvement.

Summary

The Thai economy slowed down in March 2024 as domestic demands and tourism sectors softened after expanding well in the preceding periods and partly because the benefits from the Easy E-Receipt campaign dissipated. Despite this slowdown, the economy showed signs of improvement in the first quarter compared to the previous one.
But the overall growth was likely to remain low on a year-on-year basis. The tourism sectors continued to be the main driver of economic activity within the service sectors, leading to increased employment. Private investment also increased, particularly in new industries and services. On the other hand, exports and manufacturing production remained stagnant due to weak global demand and structural factors that suppressed production.
Private consumption declined, particularly in durable goods, despite an improvement in non-durable goods. Government spending also contracted due to the delay of the 2024 budget.
On the economic stability front, in March, headline inflation was less negative due to higher fresh food inflation, as the high base effect diminished in conjunction with increases in vegetable and fruit prices. Energy inflation also increased, following increases in benzene prices in line with the global crude oil prices. Meanwhile, core inflation decreased due to a high base effect and a decline in personal goods prices due to several promotional campaigns. The current account showed a smaller surplus due to a lower trade surplus.
The labor market slightly improved, but employment in the manufacturing sector warranted close monitoring. On a quarterly basis, headline inflation in the first quarter declined from both fresh food and energy categories. The current account registered a higher surplus thanks to higher travel receipts. The labor market condition slightly deteriorated, mainly due to lower employment in the manufacturing sector.

Foreign tourist arrivals and tourism revenue decreased after seasonal adjustment, mainly due to lower Muslim tourists, especially from Malaysia and the Middle East, during the Ramadan fasting season. Chinese tourists also declined following a significant increase during the Chinese New Year festival in the previous month.