Monthly economic update: December 2024
Executive summary
Global Economy
- In November 2024, the global economy showed signs of slowing and underperformed expectations. The composite PMI showed modest growth, bolstered by progress in Asia. However, the service sector continued to prove more resilient than manufacturing. Price pressures remained moderate in emerging Asian countries, reflected by levels near central bank targets, while concerns about inflationary risks began to loom in developed markets.
- The U.S. economy remained strong in Q4, especially in consumption, with stronger-than-expected retail sales. While employment grew, the rising unemployment rate suggests a labor market slowdown. Meanwhile, the recent CPI signals some persistence in the disinflation process.
- China's economic momentum is slowing due to weak consumption, while industrial production, driven by strong exports, outpaces consumption. This trend may reflect pre-Trump presidency front-loading. In the property sector, housing prices eased in November, but recovery remains fragile and uneven.
Domestic Economy
- In October 2024, Thai economic activities improved from the previous month thanks to a temporal improvement in private consumption, which partly benefited from the government’s stimulus program. Merchandise trade rose dramatically as mainly from industrial products including agri and agro-industrial products. Manufacturing production also increased due to improved exports as higher domestic demand, excluding automobiles.
- Headline inflation continued to accelerate in November 2024. The major increase in price pressures was primarily due to energy price as well as raw food price. Besides that, core inflation also relatively rose. Overall, Thailand’s inflation still below the central banks’ target range and below the peers.
- The MPC voted 7 : 0 to maintain the policy rate in the last meeting of 2024, deeming the current rate is consistent with the economic trajectory close to potential, inflation moving towards the target range, and safeguarding long-term macro-financial stability, together with preserving policy space amid increasing uncertainties going forward.
Financial Market
- U.S. Treasury yields rose as a result of adjustments to the Federal Reserve's interest rates and uncertainty surrounding Trump’s policy, whereas Thai bond yields saw a slight decline due to expectations of a lower Thai policy rate.
- Despite the typical year-end appreciation trends, the Thai baht depreciated, in line with regional currencies. Looking ahead, the baht, with its low yields and export-driven economy, is expected to face challenges under a Trump presidency.
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