BANGKOK – Thailand’s economic growth unexpectedly slowed in the third quarter, supporting the case for the new government to proceed with its planned US$14 billion (S$18.8 billion) cash handout programme.

Gross domestic product in the three months to September rose 1.5 per cent from a year earlier, the National Economic and Social Development Council (NESDC) said on Nov 20. This was well below the 2.2 per cent median estimate in a Bloomberg survey and the 1.8 per cent growth in the second quarter.

The economy expanded 0.8 per cent quarter on quarter, against a median estimate of 1.3 per cent growth. For the first nine months, the economy improved just 1.9 per cent.

The disappointing data prompted the NESDC to narrow its 2023 GDP growth forecast to 2.5 per cent from a prior estimate of 2.5 per cent to 3 per cent. Its chief, Mr Danucha Pichayanan, said during a briefing that the government should try to create sufficient fiscal space to prepare for future risks.

Even as tourism – which is a key plank of South-east Asia’s second-largest economy – recovered and buoyed domestic activity, growth still lagged many of its neighbours’ amid a slump in exports and government spending.

Dismal domestic activity has prompted the administration of Prime Minister Srettha Thavisin to push for a stimulus plan that is being opposed by some central bankers and economists. Mr Srettha is aiming to accelerate annual growth, which has averaged below 2 per cent in the past decade, to 5 per cent.

The centrepiece of Mr Srettha’s strategy to lift the economy out of the cycle of low growth is a digital wallet programme that will see 50 million Thais aged 16 years and above receive a one-time handout of 10,000 baht (S$384) starting in May 2024.

That the cash aid plan to boost spending will be funded by borrowing that may widen the fiscal deficit and stoke inflation has triggered a backlash, including from Thailand’s opposition party.

Thailand’s GDP growth is expected to improve to 2.7 per cent to 3.7 per cent in 2024, Mr Danucha said on Nov 20, led by a recovery in exports, private investment, private consumption and tourism.

The 2024 growth outlook has not considered the roll-out of the cash handout programme in 2024, he added.

The government maintained its estimates for the tourism sector in 2023 at 28 million foreign arrivals and 1.03 trillion baht of revenue. For 2024, 35 million visitors from overseas are expected and they are estimated to bring in 1.3 trillion baht in revenue, according to the NESDC. BLOOMBERG