Thai Economic Growth Predicted to Slow to 2.5-3% Amid Global Economic Downturn
The National Economic and Social Development Council (NESDC) has adjusted its forecast for Thailand’s economic growth this year due to the impact of the global economic slowdown. Secretary-general Danucha Pichayanan announced during a recent press conference that the growth projection has been lowered to 2.5-3%, down from the previous estimate of 2.7-3.7%.
This downward revision comes as a result of several factors. Firstly, the delayed formation of the new government is expected to affect the disbursement of the 2024 fiscal budget, which will likely be delayed to April next year or even extended by up to six months. Consequently, this delay could also impact the government’s investment budget in the fourth quarter of this year. Furthermore, any political unrest during the transition to the new government could dampen both domestic consumption and foreign investment.
Another significant factor contributing to the revised growth forecast is the continued contraction of exports. In the second quarter of this year, exports contracted by 5.6% for the third consecutive quarter compared to the same period last year. In the first half of 2023, the value of exports experienced a 5.1% decline, primarily driven by a 6% decrease in export volumes.
The NESDC attributes the decline in exports to the slowdown of major economies and the weaker-than-expected economic recovery in China. It anticipates a further decline in export volumes for the entire year of 2023, with a projected decrease of 1.8%.
To mitigate these challenges and boost economic growth, Secretary-general Danucha emphasized the importance of finding new potential export markets for Thai products. He also highlighted the need to enhance the production process through the adoption of new technology and innovation to improve competitiveness.
Despite these economic headwinds, there are other positive indicators. The NESDC predicts 28 million foreign tourist arrivals in 2023, which would contribute to the growth of the tourism sector. Moreover, private consumption expenditure is projected to increase by 5%, supported by an improved labor market and income growth in non-agricultural sectors, particularly those related to tourism.
Total investment, however, is expected to experience a slight decline. The decline in private investment aligns with the drop in export and import activities, while the decrease in public investment is attributed to the delayed disbursement of the 2024 fiscal budget.
Overall, Thailand’s economic growth for the second quarter of 2023 was recorded at 1.8%, lower than the 2.6% growth in the previous quarter. In the first half of the year, the economy grew by 2.2%.
Despite the challenges posed by the global economic slowdown, the NESDC remains optimistic that the Thai government can navigate these uncertainties and drive economic growth by focusing on export diversification and enhancing productivity through technology and innovation. While the revised growth forecast reflects a more cautious outlook, various sectors, particularly tourism, continue to show promising signs of recovery.
