In a recent analysis, Kiatnakin Phatra Securities (KKPS) noted a modest improvement in Thailand’s economy for October, highlighting growth across most components, particularly in exports and tourism, while private consumption also expanded, aided in part by government support measures.
Meanwhile, manufacturing output stayed flat due to temporary refinery shutdowns, and private investment continued to decline. The Bank of Thailand (BOT) highlighted ongoing floods as a significant downside risk.
Manufacturing production was slightly negative, registering -0.2% month-on-month (seasonally adjusted) and -0.1% year-on-year in October, following a strong September recovery after factories resumed operations. Electronics and hard disk drives (HDDs) remained key positive drivers, helped by strong export demand. The sector, however, is expected to remain weak and could weigh on fourth-quarter GDP until refinery maintenance finishes in December.
Exports continued their upward trend, rising 0.7% month-on-month (seasonally adjusted). Headline exports slowed due to weaker gold exports, rising 5.3% year-on-year. Excluding gold, exports grew a strong 12.8% year-on-year, led by electronics and machinery. The BOT also observed a 5.8% improvement in products previously subject to reciprocal tariffs, such as electrical appliances and processed agricultural goods.
The service sector showed a slight month-on-month improvement of 0.8% (seasonally adjusted) and 0.4% year-on-year, though growth was softer than in the first half of the year. This improvement was mainly supported by hotel and restaurant activities, government tourism campaigns, a 1.9% rise in tourism revenue, and an 11.0% increase in tourist arrivals.
Private consumption grew 1.3% month-on-month (seasonally adjusted) and 4.1% year-on-year, up from 3.8% in September, driven by higher spending in hospitality, fuel, and passenger cars. Consumer confidence improved, supported by stimulus measures like the ‘Half-Half plus’ co-payment scheme.
On the downside, private investment dropped 1.1% month-on-month (seasonally adjusted) and 7.9% year-on-year. The current account shifted to a US$1.8 billion deficit from a previous US$1.9 billion surplus, primarily due to a US$1.0 billion trade deficit attributable to the gold trade.
KKPS maintains that although service and tourism sectors improved due to seasonal factors, year-on-year growth remains weaker than earlier in the year. With floods adding further risk, the brokerage firm expects fourth-quarter growth to soften, increasing the likelihood of a rate cut as the economy risks entering a technical recession.
