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Thailand’s Q2 Economic Growth At 1.8% Amid Export Challenges and Tourism Resilience

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(CTN NEWS) – Thailand’s economy expanded by 1.8% in the April to June period compared to the same timeframe in the previous year, according to data released by the National Economic and Social Development Council (NESDC) on Monday.

This growth rate represents a more restrained pace than the 2.6% upswing observed from January to March. Notably, it also fell short of meeting the median projection of a 3.1% expansion for the second quarter, as indicated by a Reuters survey of economists.

The NESDC highlighted that the primary driver behind the economy’s performance was the acceleration in private consumption, although there was a deceleration in both private investment and the export of services.

Divergent Trends: Private Consumption, Export Struggles, and Tourism Recovery

During the April to June period, private consumption demonstrated robust growth with a 7.8% surge, marking a notable increase from the 5.8% registered in the preceding quarter.

However, the export sector, which contributes approximately 60% to Thailand’s GDP, continued to grapple with challenges stemming from subdued global demand, particularly from China, Thailand’s largest trading partner.

The export of goods experienced a contraction of 5.7% in the second quarter, extending the 6.4% decline witnessed in the previous quarter due to feeble worldwide demand.

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An analyst at Asia Plus Securities cautioned that the decline in exports could worsen, given the unfavorable economic prospects in China, suggesting a more significant drop in exports during the latter part of the year.

Conversely, the tourism sector showcased promise as overall earnings surged by 71.7% in comparison to the same quarter in 2022.

This revival in tourism, constituting about 18% of Thailand’s GDP, gained momentum during the latter half of 2022, particularly in the final quarter when entry restrictions in Bangkok were lifted.

Thailand Economic Challenges: Tourism Projections and Political Uncertainty

The Tourism Authority of Thailand anticipates an increase in foreign tourist arrivals to 29 million for the current year, a significant rise from the 11.5 million recorded in 2022. However, this projection remains below the pre-COVID-19 level of 39 million visitors in 2019.

The NESDC’s latest projection for Thailand’s economic growth in the ongoing year indicates a range of 2.5% to 3.0%, reflecting a downward adjustment from the prior forecast range of 2.7% to 3.7%.

Adding to economic headwinds is the challenge of diminished demand from China due to a less optimistic economic outlook. Thailand’s political uncertainty further compounds the situation, potentially impacting the economy in the later part of the year.

Analysts suggest that this lingering political uncertainty could cast a shadow on the economy during the third and fourth quarters.

Thailand’s recent general election and the subsequent struggle to form a government by major coalition parties raise concerns about the sluggish pace of government formation and prime ministerial selection.

The resulting political impasse has prompted apprehension within the business community, as it could potentially erode confidence among foreign investors.

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