BANGKOK- Thailand’s economic recovery is intact but key drivers – exports and tourism spending – are weaker than expected, its central bank governor said, flagging a downward revision to this year’s growth forecast.
In remarks recorded on Aug.17 and played at a business seminar on Wednesday, Bank of Thailand chief Sethaput Suthiwartnarueput also reiterated that the benchmark rate was approaching a “neutral” level – one that is neither restrictive or accommodative.
Southeast Asia’s second-largest economy has been hobbled by slowing global growth and falling investor confidence due to prolonged political uncertainty following elections in May. A new government is, however, expected to be formed soon after Srettha Thavisin this week won a parliamentary vote to become prime minister.
“The picture is not all wine and roses,” Sethaput said, adding that 2023 growth could come below the central bank’s 3.6 percent forecast and a revised figure would be published in September.
Exports have been hurt by a slower-than-expected recovery in China and tourism spending has also been softer than thought. Thailand expects 29 million foreign visitors this year, he said. That compares with pre-pandemic levels of nearly 40 million foreign visitors.
The central bank has raised its key rate seven times to 2.25 percent since last August to tame inflation and help the economy.
Sethaput said inflation was coming back towards its target range of 1 percent to 3 percent , but there was a risk that the El Nino weather pattern could push up food prices.
“Our policy objective is to get the landing right,” Sethaput said, adding the central bank would focus on medium-term considerations, including helping growth reach 3 percent -4 percent .
Thailand’s economy grew 1.8 percent in the April-June period on the year and 0.2 percent on the quarter, sharply slowing from the previous three months.
That has prompted the government planning agency – which complies GDP data and has separate forecasts to the central bank – to cut its 2023 growth projection to 2.5 percent -3.0 percent from 2.7 percent – 3.7 percent .
Last year’s growth was 2.6 percent.
Thailand’s economy is projected to grow 3.9 percent this year, up from a previous forecast of 3.6 percent, helped by private consumption growth and a recovery in tourism, the World Bank said.
Thailand’s economy expanded 2.6 percent in 2022, when its tourism sector began to rebound after broad pandemic-related travel curbs were eased.
Growth is expected at 3.6 percent in 2024 and 3.4 percent in 2025, with tourism and private consumption remaining the primary drivers of growth as external demand weakens, the bank said in a statement.
The return of tourists, particularly from China, has strengthened the tourism outlook. Arrivals are projected to reach a greater-than-expected 28.5 million this year, 84 percent of the pre-pandemic 2019 level, it said.
However, downside risks remain as weaker-than-expected global growth and political uncertainty pose key challenges to the near-term growth outlook, the bank said.
