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World Bank trims Thai growth to 3.4% in 2023, 3.5% 2024
The World Bank has lowered Thailand’s economic growth forecast for this year and 2024 due to a decline in exports and easing global demand.
Key Takeaways
- Thailand’s economic growth forecast for 2023 has been revised down to 3.4% from 3.6%, and for 2024 it has been reduced to 3.5% from 3.7%
- The World Bank has lowered Thailand’s economic growth forecast for 2023 and 2024 due to anticipated contractions in exports caused by easing global demand.
- The country’s GDP growth in the next few years will be driven by the recovery of tourism and strong private consumption, with foreign tourist arrivals expected to reach pre-pandemic levels by the end of 2024.
- While the East Asia Pacific region is projected to have higher growth than other emerging market economies, sustaining high growth in Thailand will require reforms in services to boost productivity and diversify trading partners.
The World Bank has released its East Asia and the Pacific Economic Update for October 2023. The report states that economic activity in the region has recovered from recent shocks and is growing. However, output levels are still below pre-pandemic levels in many countries and inflation remains high in some places.
The East Asia and Pacific region remains one of the fastest growing and most dynamic regions in the world, even if growth is moderating
World Bank East Asia and Pacific Vice-President Manuela V. Ferro
Thailand’s economic growth forecast for 2023 has been revised down to 3.4% from 3.6%, and for 2024 it has been reduced to 3.5% from 3.7%. The decline in economic growth during the second quarter of this year was worse than expected, with a decrease of 1.8%.
Last week the Bank of Thailand has projected a growth rate of 2.8% and 4.4% for the years 2023 and 2024 respectively, and 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.
The recovery of tourism and strong private consumption will be the main drivers of Thailand’s GDP growth in the coming years. The bank also predicts a return to pre-pandemic levels of foreign tourist arrivals by the end of 2024.
Thailand is expecting a significant economic boost from Chinese tourists, with an estimated $4 billion in revenue. The recently implemented visa waiver is expected to attract a large number of Chinese visitors, with estimates ranging from 4 to 4.4 million tourists this year. This influx of tourists is expected to make Chinese visitors once again the largest group of visitors to the country.
Inflation is expected to be low due to lower energy prices, but there are upside risks to core inflation. Public debt is projected to remain above 60% of GDP until the end of 2023.
The region of East Asia and Pacific is expected to have higher growth compared to other emerging market economies, with China’s growth projected at 5.1% in 2023. But reforms will be necessary to sustain high growth, particularly in the services sector.
According to a Special Focus section of the report, the services sectors have the potential to drive development in a region that has traditionally relied on manufacturing-led growth. Over the past decade, these sectors have contributed significantly to the growth of labor productivity. Services exports have also outpaced goods exports, and foreign direct investment in services has grown five times more than in manufacturing in China, Indonesia, Malaysia, the Philippines, and Thailand.
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