Monthly economic update: October 2024
Executive summary
Global Economy
- In September 2024, the global economy showed signs of
slowing, with disappointing data except for the US. PMI figures indicate a
continued slowdown,
with the manufacturing sector contracting for the third straight month and slower growth in services. Price pressures have eased and fallen below the central bank's target. - U.S. economic data indicate strength, supported by a string of better-than-expected labor market figures. Additionally, retail sales, which serve as a measure of consumption, remain strong, fostering optimism for U.S. GDP in the third quarter.
- China's economic activity showed a slight improvement
in September; however, overall GDP growth in the third quarter was the
slowest since early 2023.
A recent stimulus package has increased the chances of meeting this year's GDP target, but its long-term effectiveness is still uncertain.
Domestic Economy
- In August 2024, Thai economy remained stable from preceding period. Private consumption slightly increased, as mainly from non-durables spending. On the other hand, private investment and industrial production declined, while merchandise exports improved across several categories, but some of these improvements were temporary.
- The Monetary Policy Committee (MPC) voted 5 to 2 to cut the policy rate by 25 bps. from 2.50 to 2.25%, effective immediately in the fifth meeting of 2024, the lowest rate in two years. The Committee concerned over the balance regarding new debt creation and household debt risk. However, this interest rate reduction in this meeting is not the beginning of an easing cycle or a continuous reduction.
- Headline inflation turned accelerated to 3-month-high in September 2024. The major increase in price pressures was primarily due to diesel price as well as raw food price due to flood effect. Besides that, core inflation continued to accelerate. Overall, Thailand’s inflation still below the central banks’ target range and below the peers and major economies.
Financial Market
- U.S. Treasury yields increased as investors recalibrated their expectations for Fed rate cuts in light of a strong labor market. Meanwhile, Thai government bond yields were affected by an unexpected rate cut from the Thai MPC.
- The dollar has strengthened due to strong economic data, especially in the labor market, and is further boosted by Middle Eastern tensions and Trump's potential election win. Meanwhile, the Thai Baht has weakened to over 33.00 against the dollar since early October, aligning with other regional currencies, though it sometimes correlates with gold prices. Despite this, the baht has appreciated about 3% since the end of last year.
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