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Economic outlook Outlook Quarter 3/2023
Abstract
SCB EIC revised down Thailand’s economic growth outlook in 2023 due to lower-than-expected Q2 results and export contraction. However, there is potential from private consumption and tourism. In 2024, an upbeat recovery in foreign tourists and increased private investment is expected. Inflation is also projected to increase. The global economy is expected to grow but could face fragility due to inflation and policy rate hikes. The Thai economy faces uncertainties from China’s slowdown and severe drought. Government policies, such as a massive stimulus plan, could boost growth but may have long-term fiscal burdens. SCB EIC proposes long-term policies to enhance competitiveness and sustainable growth.
SCB EIC has revised down the Thai economic growth outlook for 2023 to 3.1% due to lower-than-expected performance in Q2 and continued export contraction. However, there is still potential from private consumption and the tourism sector, with foreign tourist arrivals projected to reach 30 million people. In 2024, the economy is expected to accelerate to 3.5%, driven by an increase in foreign tourists to 37.7 million, as well as growth in private investment and Thai exports.
Headline inflation is expected to rise, driven by higher energy and food prices, but should remain within the target range at 1.7% in 2023 and 2% in 2024. The core inflation is projected to stay elevated at 1.4% in 2023 and 1.5% in 2024. SCB EIC anticipates another policy rate hike in September, bringing the rate to 2.5%, to support the economy and maintain financial stability.
The global economic rebound is expected to be unsynchronized, with global economic growth forecasted to reach 2.4% in 2023 and remain steady in 2024. China’s economy may face a slowdown due to structural challenges, while rising commodity prices could drive global inflation. The US Federal Reserve, European Central Bank, and Bank of England are expected to adjust policy rates accordingly. The People’s Bank of China will continue with monetary easing, while the Bank of Japan may reduce its ultra-loose monetary policy.
Looking ahead, the Thai economy faces uncertainties such as China’s economic slowdown affecting exports and severe drought damaging crops. Additionally, new government policies, including a massive stimulus plan, may boost short-term growth but could have long-term fiscal burdens. SCB EIC suggests prioritizing policies that enhance Thailand’s competitiveness and support sustainable growth, such as promoting fair competition and restructuring tax policies to reduce inequality.
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