Thailand Records Historic Current Account Deficit in April
Thailand experienced its largest-ever current account deficit in April, a development officials suggest is likely to be temporary. The imbalance was primarily attributed to a slowdown in tourism and a decline in private consumption, exacerbated by rising energy prices.
Economic Indicators Signal Weakening Activity
Data released indicates a dip in tourist arrivals and spending during April. This downturn, coupled with increased living costs due to higher energy prices, led to a reduction in consumer spending on goods and fuel. Consequently, headline inflation turned positive, driven by elevated domestic petrol and diesel prices. Core inflation also saw an increase as energy costs were passed on to food and public transportation prices.
Despite these challenges, merchandise exports, excluding gold, showed an upward trend. This growth was bolstered by robust performance in the technology products and automotive sectors. Manufacturing production remained relatively stable, with limited impact from conflict-related supply chain disruptions.
Central Bank Assesses Economic Outlook
Assistant Governor Chayawadee Chai-anant stated that the record deficit is not a cause for immediate concern and is expected to be a transient issue. She also noted that the conflict in Iran is anticipated to conclude mid-year.
Ms. Chai-anant further commented on the currency, indicating that the Thai baht is expected to continue experiencing significant volatility, reflecting ongoing global uncertainties. She highlighted key factors that require close monitoring, including developments in the Middle East, potential shifts in U.S. trade policy, El Nino weather patterns, and the effectiveness of government economic stimulus measures.
Growth Forecasts and Fiscal Measures
While Thailand’s Gross Domestic Product (GDP) growth in the first quarter surpassed initial projections, the state planning agency, the National Economic and Social Development Council, has maintained its full-year growth forecast for 2026 between 1.5% and 2.5%.
Earlier this month, the Governor of the Bank of Thailand, Vitai Ratanakorn, expressed an expectation for economic growth to reach 2.1% this year, an upward revision from the 1.5% projection made in April. During the April policy meeting, the key interest rate was held steady at 1.00%.
In a move to support the economy, the cabinet recently approved new borrowing amounting to 200 billion baht (approximately $6.15 billion USD). These funds are designated to finance a consumer subsidy program, part of a broader 400 billion baht loan decree aimed at mitigating the economic repercussions of ongoing global conflicts.
