Boost in consumption, tourism props up Thai economy in July as export struggles
Domestic consumption and tourism were the redeeming features of the Thai economy in July, while exports continued to suffer from weak global demand.
According to Pornchai Thiravej, director of the Fiscal Policy Office, the Thai economic situation in July this year benefited from domestic consumption of durable goods and the expanding tourism sector. This growth came from both foreign tourists and domestic visitors. Meanwhile, inflation remained consistently low. However, exports continued to decline due to global economic conditions.
Among economic indicators, domestic consumption sent a positive signal compared to the same period last year, especially in durable goods consumption. This was reflected in the increased sales of passenger cars and newly registered motorcycles in July, which increased by 17.3% and 13.0% respectively year on year, and increased month on month, after seasonal adjustment of 7.5% and 6.6% respectively, Pornchai said.
As for the consumer confidence index in July, it decreased to 55.6 from 56.7 the previous month. This decrease was due to consumer concerns about household debt and the value-added tax at a fixed rate. In July, the consumer price index decreased by 10.2% compared to the same period last year. Actual agricultural income decreased by 1.6% year on year, he added.
The value of exports also contracted year on year. The total value of exports in July was U$22.14 billion, down 6.2% year on year. Excluding petroleum-related products, gold, and weaponry, the decrease was 2%.
Certain industries experienced growth, such as automobiles, telecommunication equipment and components, fresh, frozen and dried fruits, dairy and dairy products, and seasonings. However, the majority of Thailand’s main trading partners experienced contraction, Pornchai said.
Nevertheless, there are still markets that are continuing to expand, such as Hong Kong, the United Kingdom, Australia, and the United States, with growth rates of 9.7%, 5.8%, 2.4%, and 0.9% respectively. Similar trends were seen in markets like Switzerland and Russia, which expanded by 64.9% and 33.8% respectively.
As for the supply side of the Thai economy, there was positive support from the tourism sector, which showed improvement compared to the same period last year. The tourism sector saw an increase of 119.5% in foreign visitors in July 2023, and an increase of 0.3% month on month, despite the seasonal effects, he said.
The majority of tourists came from China, Malaysia, South Korea, India, and Vietnam. Domestic tourism also increased by 18.1% compared to the same period last year.
The Thai economy remains relatively stable, reflected in the general inflation rate of 0.38% in July 2023, while the underlying inflation rate was 0.86%. The public debt-to-GDP ratio was 61.2% as of June, which is within the limits set by the Fiscal Discipline Act of 2018.
The rate of people applying for new jobless benefits in July was 0.61%. The external stability remains at a stable level and can withstand the risks from global economic fluctuations. The foreign exchange reserves as of July-end were at a comfortable U$220.7 billion, Pornchai said.
