Monthly economic update: August 2024
Executive summary
Global Economy
- In July 2024, the global economy continued to slow down, with recent economic data showing unexpected downturns. Additionally, global manufacturing displayed further signs of weakening, as indicated by PMIs. Meanwhile, global inflation continued to edge downwards and remained manageable, especially in the United States.
- Overall, U.S. economic data still suggest a soft landing, though weaker-than-expected nonfarm payrolls have raised concerns about a potential recession. Based on recent data, the Fed may begin to ease policy rates at its next meeting.
- The Chinese economy shows no signs of improvement, with key economic indicators remaining fragile. Moreover, export growth, which has been essential for offsetting other economic data, seems to be losing its strength.
Domestic Economy
- In June 2024, Thai economy slowed down further from the previous month. The slowdown was attributed to decrease in private consumption, exports of goods as well as manufacturing production. Meanwhile, private investment gradually increased corresponding to the business sentiment index.
- Nonetheless, activities in tourism sector continued to expand from the previous month together with tourist receipt. The number of foreign tourist arrivals slightly increased from previous month as mainly from rising in number of tourists from East Asia ex. China, Northern Europe and the US.
- Headline inflation slightly accelerated in July 2024. The rebound in price pressures was primarily due to increasing price pressures in energy following rising global oil price, and food (rice, instant food, fruit). Meanwhile, core inflation ticked up highest since January 2024.
- Thai economic growth in Q2/24 grew better than expected, and accelerated from previous quarter, which mainly attributed to increase in government expenditure due to the disbursement of the annual budget while private spending on both consumption and investment decelerated.
Financial Market
- U.S. government bond yields fell sharply as markets anticipated aggressive Federal Reserve rate cuts this year amid fears of a U.S. recession. Nevertheless, these yields slightly increased as those concerns began to ease. Similarly, Thai government bond yields somewhat tracked the changes in U.S. bond yields.
- The dollar has significantly weakened as markets anticipate additional Federal Reserve rate cuts and unwind positions in Japanese yen carry trades. At the same time, the Thai baht has dropped below 35.00 baht per dollar, aligning with regional trends amid continuing uncertainty regarding political policies.
