Bank of Thailand reports fourth-quarter expansion and less negative headline inflation

The Bank of Thailand published its latest assessment of economic conditions, reporting that Thailand’s economy expanded in the fourth quarter and that activity in December increased from the previous month, supported by stronger external and domestic demand alongside improving supply-side conditions. Headline inflation remained negative but became less negative, while core inflation stayed positive and declined slightly. External demand rose on continued growth in merchandise exports, particularly electronics and agricultural products, while domestic demand was supported by higher private consumption and private investment, partly aided by government support measures, and by increased central government spending. Services activity expanded in line with trade and tourism, and manufacturing production picked up on both domestic and external demand and the resumption of operations at factories that had temporarily shut for process upgrades; in December, tourism receipts declined due to fewer foreign tourist arrivals. On macroeconomic stability, fresh food prices, especially vegetables, rose following flood-related supply disruptions, contributing to less negative headline inflation; lower price pressures in public transportation fares, personal care products and cleaning supplies weighed on core inflation. The current account recorded a surplus and labor market conditions were described as stable, while key issues flagged for monitoring included the impact of baht appreciation, tighter business liquidity conditions particularly for SMEs, and the pace of recovery in manufacturing and foreign tourist arrivals.