BANGKOK- Thailand’s finance ministry has lowered its 2023 economic growth outlook to 3.6 percent from 3.8 percent projected earlier, on expectations of a fall in exports as global demand weakens, officials said on Tuesday.
Exports, a key driver of Thai growth, are expected to drop 0.5 percent this year, compared with a previous forecast for a 0.4 percent rise, Pornchai Thiraveja, head of the ministry’s fiscal policy office, told a briefing.
“A global slowdown is a drag on Thailand’s economic growth… and exports might not increase as thought,” he said.
Public consumption is expected to fall 2.1 percent this year due to an expected delay in Thailand’s 2024 fiscal budget as the country holds an election on May 14, Pornchai said.
However, growth in Southeast Asia’s second-largest economy, is expected to be propped up by tourism and domestic consumption, he said.
Thailand is expected to receive 29.5 million foreign tourist arrivals this year, with the return of Chinese visitors, versus 27.5 million projected earlier, Pornchai said.
Pre-pandemic 2019 saw a record of nearly 40 million foreign tourists, who spent 1.91 trillion baht ($55.62 billion). Tourism accounted for about 12 percent of gross domestic product (GDP).
The baht is expected to average 33.17 per dollar this year versus a previous forecast of 32.5, with the dollar supported by US rate hikes, fiscal policy advisor Wuttipong Jittungsakul said.
The ministry predicted average headline inflation at 2.6 percent this year, down from 2.8 percent projected earlier, and against a 24-year high of 6.08 percent last year.
Thailand’s economy unexpectedly contracted in the final quarter of 2022 as a rebound in the vital tourism sector was unable to offset falls in key sectors including exports and manufacturing.
But the economy, Southeast Asia’s second largest, should not see a recession, thanks to a pick-up in tourism, the agency said.
Gross domestic product (GDP) in the fourth quarter of 2022 was 1.5 percent lower than in the previous three months, according to seasonally adjusted data issued by the agency, the National Economic and Social Development Council (NESDC).
It was the first drop in five quarters and compared with a Reuters poll forecast for a rise of 0.5 percent.
The economy had grown 1.1 percent in the third quarter, but in the fourth it was weighed down by falls in manufacturing, exports and public consumption.
Fourth-quartet GDP was 1.4 percent higher than a year earlier, with annual growth slowing to the weakest pace in five quarters. That compared with a forecast annual rise of 3.5 percent in the poll and the third quarter’s revised 4.6 percent.
Economies are conventionally judged to be in recession if GDP contracts in two successive quarters, but the agency said growth would return in January-March, thanks in part to strengthening tourism.
As the sector recovers from the pandemic, China’s reopening is providing a further boost, helping offset some effect of weakening exports.
For all of 2022, the economy was 2.6 percent larger than in 2021, when its growth of 1.5 percent was among the slowest in Southeast Asia. Earlier, the NESDC forecast 2023 growth in full-year GDP of 2.7 percent to 3.7 percent, revising down its earlier outlook of 3 percent to 4 percent. It forecast a 1.6 percent fall in exports for the year.
Elections that will be held no later than May should also help domestic consumption, he added.
With the return of China’s visitors, the agency now expects Thailand to receive 28 million foreign tourist arrivals this year, up from the 23.5 million projected earlier. – Reuters
