According to the World Bank’s East Asia and Pacific Regional Economic Outlook in October 2023, Thailand’s economic growth forecast for 2023 has been revised from 3.6% to 3.4%. Additionally, the projection for 2024 has been lowered by 0.2 percentage points. It now stands at 3.5% instead of the previous estimate of 3.7% in April.
The World Bank anticipates a 2.1% contraction in Thailand’s goods exports in 2023, measured in US dollars, primarily due to reduced demand from major advanced economies. Furthermore, economic growth in the second quarter of this year declined more than expected, reaching 1.8% on a year-on-year basis.
The prolonged process of forming a new government is also expected to delay both public and private investments. The GDP growth outlook for 2023 and 2024 hinges on the recovery of the tourism sector and robust private consumption. Foreign tourist arrivals are projected to return to pre-pandemic levels by the end of 2024.
The World Bank also predicts that Thailand’s economic growth will be 3.3% in 2025.
Debt and Inflation
Moreover, the bank forecasts headline inflation of 1.5% in 2023, which is lower than most emerging market economies. This is due to lower energy prices and the continued implementation of price controls. However, there are still upward risks to core inflation due to increased consumption and higher global food prices.
With the slow progress in fiscal consolidation due to extended energy subsidies, Thailand’s public debt is expected to remain above 60% of GDP until the end of 2023. The current account balance is projected to shift from a deep deficit over the past two years to a positive position in 2023.
The decrease in inflation is expected to alleviate some pressure on households. The expansion of the state welfare card program is anticipated to contribute to poverty reduction in 2023.
According to World Bank East Asia and Pacific vice-president Manuela V. Ferro, Thailand’s household debt ratio, which stands at 90.6% of GDP, is a more significant concern than public debt. Public debt is projected to be 60.2% of GDP in 2023, decreasing to 59.6% in 2024. It is expected to further decline to 59.5% in 2025.
As a result, the poverty rate will decline to 9.1% in 2023. It will continue to decrease in 2024 and 2025.
The World Bank has noted that the region’s growth remains higher than that of other emerging markets and developing economies. The East Asia Pacific region is expected to grow by 4.6% in 2023, with China’s growth projected at 5.1% in the same year.
Mr. Ferro emphasized that over the medium term, maintaining high growth in the region will necessitate reforms, particularly in the services sector. To sustain industrial competitiveness, diversify trading partners, and enhance productivity in areas such as retail, finance, education, and healthcare.