Thailand economy recovers at gradual pace, stable financial systems reflect resilience in economy

Thailand’s economy is recovering at a gradual pace, with stable financial systems reflecting the resilience in the economy. The Bank of Thailand (BoT) Governor Veerathai however, mentioned in his speech last week that some sectors within the economy may slow during the 1-year mourning period.

The immediate impact of a downward pressure would certainly be felt in the entertainment or tourism-related sectors. For the past three years, hotels and restaurants have contributed about 18 percent of annual GDP growth.

"For now, we maintain our GDP growth forecasts of 3.3 percent and 3.5 percent for 2016 and 2017 respectively," DBS commented in its latest research note.

However, risks remain aligned to the downside, with export orders likely to provide the only relief to the growth in gross domestic product (GDP) this year.

Meanwhile, export growth surprised with a 6.5 percent y/y print for August. It remains to be seen if this positive showing were to be sustained in September, ahead of the data release this week.