Executive summary
Global Economy
- In August 2024, the global economy shows signs of slowing, with recent data disappointing across all regions, despite some improvement from last month. PMI data indicates agrowing divide between manufacturing and services, with manufacturing contracting for the second month in a row. While price pressures have eased due to falling energy prices, global core inflation remains persistent, though pressures on goods prices may soon decrease.
- Overall, U.S. economic data continue to indicate a slowdown. However, this quarter has seen a notable shift in the risk landscape, with inflationary pressures easing and job growth slowing significantly in both demand and supply.
- The Chinese economy shows no signs of recovery, with key economic indicators remaining weak. As a result, there is a risk of falling short of this year’s 5% GDP target.
Domestic Economy
- In July 2024, Thai economy improved slightly after a slowdown from preceding periods. The major attribute was driven by rising external demand, in both of merchandise export and foreign tourist arrivals. The number of foreign tourist arrivals slightly increased from previous month which has shown broader based recovery in most regions. On the domestic activities, private investment increased from the previous month, aligning with the Manufacturing Production Index, while private consumption remained stable.
- New government announced policy frameworks to the parliament on 12-13 September 2024. It covered urgent policies and medium to long term prospects including adjusting Digital Wallet scheme (Phase I) which will be delivered to vulnerable individuals of THB 10K cash-handout through state welfare card and disable persons (14.55 mn persons), expected to start in late September 24.
- Headline inflation decelerated to 4-month-low in August 2024. The decrease was primarily due to increasing in food prices as well as energy prices, while core inflation continued to rise. Overall Thailand’s inflation remained below the target range and its peers.
Financial Market
- U.S. government bond yields, including the 2-year and 10-year Treasuries, have sharply declined following the Fed's 50 basis point rate cut, with indications of more reductions this year. Short-term yields are more sensitive to interest rate changes. Additionally, the 2-10 spread is back in positive territory, which often signals a recession ahead. Similarly, Thai government bond yields have followed U.S. trends but to a lesser extent.
- The dollar has notably weakened as the Fed begins its easing cycle, while the Thai baht has also fallen sharply below 33.50 baht per dollar, aligning with regional trends.
