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Economic and Financial Outlook October 2023

19 ต.ค. 2566

Monthly economic update: October 2023


Executive summary

Global Economy

  • In August 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. Meanwhile, 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 modest pace, while European demands had been dampened by oil price surges and conflicts in the Middle East. Both economies gained supports from resilient labor markets. Japanese  economy steadily rebounded from domestic demands and tourists.  China’s economy started to show signs of stabilizing.

Domestic Economy

  • In August 2023, the Thai economy continued to recover at slower pace. Private consumption and investment slightly softened after a good expansion in the preceding period. The number of foreign tourist arrivals dropped slightly compared to previous month in several nationalities, especially tourists from long-haul destination and China.
  • The value of merchandise exports improved slightly due to the temporal factors and dramatic decrease in inventory to prepare for high season demand. Likewise, export of industrial products particularly to Japan increased significantly while the others also improved.
  • Headline inflation in September 23 decelerated from energy inflation on the back of government measures. Major food prices continued to drop.
    Core inflation and fresh food prices decreased due to lower prepared food and meat prices as supply in the market increased.

Financial Market

  • Major central banks are near the end of their hiking cycle. Market participants have pointed out possibilities that the Fed would maintain its policy rate in November 2023 meeting. Nevertheless, probabilities for another 25-bps rate hike in December meeting are still unsettled.
  • Investors went into long term bond tenor, for both US and Thai bond, due to anticipation that policy rates move toward their peaks. Meanwhile, 10y-2y yield spread for Thai government bond was still in positive territory. 
  • USDTHB largely depreciated in September, ending 36.54 level. It could be around 36.30-36.80 in October. US Dollar edged higher following the safe-haven demand induced by market concerns over conflicts in the Middle East.