Monthly economic update: September 2023
Executive summary
Global Economy
- In July 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 loosing sign. Japanese economy steadily rebounded from domestic demands and tourists. China’s economy slowly rebounded.
Domestic Economy
- In July 2023, the Thai economy continued to recover. Private spending increased in both consumption and investment with consumption being benefited from a long holiday this month. The number of foreign tourist arrivals reached its peak since pandemic thanks to the return of long-haul tourists.
- Merchandise export continued to contract for 10 months. Export of agricultural and agro-manufacturing products declined 3-consecutive month from rubber, seafood products and sugar ,as well as export of industrial products e.g., oil-related products, computer and parts and aluminum products.
- Headline inflation slightly increased from energy inflation, following increases in global crude oil prices. Core inflation and fresh food prices decreased due to the high base last year.
Financial Market
- Major central banks are near the end of their hiking cycle. However, market participants have pointed out possibilities that the Fed would continue with its rate hike again in November 2023 meeting after pausing for further hike in September 2023.
- 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 August, ending 34.93 level. It could be around 35.00-36.50 in September. US Dollar edged higher following the market’s bet on further policy rate hike over the rest of the 2023.
