(Bloomberg) -- Thailand’s economy expanded faster than expected in the third quarter on improving exports and spending by the government, which is likely to maintain pressure for rate cuts to tackle slowing private consumption.
Gross domestic product in the three months through September rose 3.0% from a year earlier, the National Economic and Social Development Council said Monday. That exceeded the 2.4% median estimate in a Bloomberg News survey and a revised 2.2% pace for the second quarter. The economy grew 1.2% quarter-on-quarter, beating a median estimate of 0.8% growth.
Despite the pickup, Thailand’s full-year expansion is set to fall short of neighbors like Indonesia, which recently posted a 4.95% quarterly expansion, and Malaysia, where GDP rose 5.3% in the same period. Thai Prime Minister Paetongtarn Shinawatra’s administration will meet on Tuesday to consider additional stimulus measures, possibly including more cash handouts, to ensure the recovery extends through next year.
Government spending will be the main driver propelling economic growth in 2025, subsequently extending support to private consumption and tourism,” NESDC chief Danucha Pichayanan said at a briefing in Bangkok, noting that cash handouts will help boost the economy in the fourth quarter.
The baht was little changed. Thailand’s benchmark stock index gained as much as 0.6% after growth beat expectations, more than Southeast Asia’s MSCI Asean stock index’s 0.3% gain.
Despite the pickup in growth, the government is likely to maintain a months-long campaign for lower borrowing costs, according to Tamara Mast Henderson, an economist with Bloomberg Economics.
“A major reason — under the hood, household spending decelerated,” she wrote in a note after the GDP release. Still, she expects that Bank of Thailand to hold rates unchanged in December as state stimulus spurs growth, after the central bank last month unexpectedly cut rates for the first time since 2020.
Read: THAILAND REACT: Growth Pickup May Not Ease Pressure for Rate Cut
The NESDC forecast 2.6% GDP growth for this year and an expansion of 2.3%-3.3% for 2025, but Danucha cautioned that US President-elect Donald Trump’s trade policy may spur uncertainty over shipments because of trade barriers.
Danucha also cautioned that household debt is expected to remain high in 2025 though the impact of debt relief measures, which are to be announced soon, will have to be observed. He downplayed the economic impact from recent flooding, saying the total damage was around 60 billion baht ($1.7 billion).
“Public investment expanded for the first time in six quarters,” the NESDC said in a statement. Exports “of goods and services and government consumption expenditure showed favorable growth. Nonetheless, private consumption decelerated and private investments contracted.”
Total investment rose 5.2%, the first gain in four quarters and a reversal of a 6.1% contraction in the three months through June, the statistics show. Private investment dropped by 2.5%, having fallen 6.8% in the previous quarter.
Other data underscored the importance of government spending to the country’s recovery, and the statement noted a “slowdown in both business and household loans, driven by tightened lending practices from financial institutions in response to deteriorating credit quality.”
Read: Thailand Readies More Fiscal Support to Sustain Growth Momentum
Public investment grew by more than 25% in the third quarter, marking the first expansion in six quarters, after a 4% decline in the previous quarter.
There were positives on the trade front, with export volumes and value picking up and delivering a roughly $5.8 billion surplus. Export items with increased values included rice, rubber, computers and computers parts, and telecommunications equipment.
Those with lower values included automotive, petroleum products and electrical appliances.
--With assistance from Eduard Gismatullin.
(Rewrites first paragraph, adds economist quotes, details of monetary policy outlook.)
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