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Economic and Financial Outlook August 2023

22 Aug 2023

Monthly economic update: August 2023


Executive summary

Global Economy


  • In June 2023, Global economic momentum had been continuously softened with weak productions and services activities going forward.  This is in accordance with muted global trade and demands. However, recently stable condition in geopolitics helped alleviating pressures on global productions.
  • Global headline inflation pressure steadily dropped and there had been more signals of nearly approaching the end of global hiking cycle.
  • US economic activity had been expanding at a moderate pace, while European demands had been dampened by high interest rate conditions. Both economies gained supports from resilient labor markets. UK economy had been steadily flat with softening sign in exports and domestic demands, while labor market signaled a losing sign. Japanese economy steadily rebounded from domestic demands and tourists.  China’s economy slowly rebounded.


Domestic Economy


  • In June 2023, the Thai economy remained on track but declined slightly. Private consumption and private investment indicators slightly decreased from the previous month. Merchandise export, excluding gold, increased mainly from agricultural products, while export of manufacturing products became flat in tandem with manufacturing production, whereas agricultural production index remained.
  • The number of foreign tourist arrivals improved to reach 6-month high thanks to the return of Malaysia and China during long holiday period. On the other hand, tourist arrivals from Europe and Middle East declined slightly after a good expansion in the previous period.
  • Headline inflation in July 2023 increased slightly, which mainly due to the rise of retail oil price and food categories’ price. While core inflation was down due to the high base effect.


Financial Market


  • Major central banks are near the end of their hiking cycle. Market participants have pointed out possibilities that the Fed would pause its rate hike again in September 2023 meeting.
  • Investors went into long term bond tenor, for both US and Thai bond, due to recession concerns. Moreover, 10y-2y yield spread for US government bond dropped below zero, signaling higher possibility of coming US economy recession. Meanwhile, 10y-2y yield spread for Thai government bond was still in positive territory. 
  • USDTHB largely appreciated in July, ending 34.26 level. It could be around 34.50-35.00 in August. US Dollar edged lower as improved risk sentiment weighed on the safe haven.