Thailand’s economy grew less than expected in the fourth quarter adding pressure on the central bank to cut its interest rates amid negative inflation.

The economy expanded 1.7 percent on a yearly basis in final quarter of 2023, the National Economic and Social Development Council said Monday. Although this was faster than the 1.4 percent rise seen in the third quarter, the rate missed economists’ forecast of 2.5 percent growth.

Quarter-on-quarter, GDP unexpectedly declined 0.6 percent, offsetting prior quarter’s 0.6 percent growth. Economists had forecast a marginal 0.1 percent expansion.

In the whole year of 2023, GDP posted a growth of 1.9 percent compared to 2.5 percent rise in 2022.

The government forecast the economy to grow in the range of 2.2 – 3.2 percent in 2024. This was down from the previous projection of 2.7 percent to 3.7 percent.

Headline inflation for this year was estimated in the range of 0.9 – 1.9 percent and the current account was projected to record a surplus of 1.4 percent of GDP.

Underpinned by the improvement in employment and consumer confidence, private spending advanced 7.4 percent. By contrast, government consumption eased 3.0 percent, which was the sixth consecutive decline.

Gross fixed capital formation slid 0.4 percent on weak general government investment.

Exports of goods and services posted a faster growth of 4.9 percent after a 1.1 percent rise. At the same time, imports rebounded 4.0 percent, reversing a 9.4 percent fall. As a result, at current market prices, trade recorded a surplus of THB 48.4 billion.

Capital Economics’ economists expects steady, if unspectacular, growth this year with a further rebound in tourism and strong government spending set to support demand. The economists forecast 3.5 percent growth this year.

Earlier this month, the Bank of Thailand had kept the rate unchanged at 2.50 percent in a split vote. As consumer price inflation remained negative and well below the target, markets expect the central bank to consider policy easing.