Abstract
SCB EIC revised down Thailand’s 2023 growth forecast to 2.6% due to lower-than-expected Q3 GDP, decreased government spending, and slower recovery of Chinese tourists. For 2024, the economy is expected to grow at 3.0%, driven by rising exports and increased private investment. However, slow recovery of household income, delayed public investment, and external factors may hinder growth. The Thai policy rate is expected to remain at 2.5%, and inflation may accelerate due to supply-side pressures and the Digital Wallet scheme. The global economy is expected to slow in 2024, with monetary policy tightening and structural pressures affecting major economies. SCB EIC is concerned about Thailand’s lower potential growth, attributed to structural issues, slow Covid-19 recovery, and rising uncertainties. The report proposes “four enhancing policies” to address these issues.
Summary
SCB EIC Growth Forecast for 2023-2024
SCB EIC has revised its growth forecast for 2023 down to 2.6% due to a much lower-than-expected Q3 GDP outturn, a large contraction in government spending, and lower tourist arrivals. However, for 2024, the Thai economy is expected to grow at 3.0%, driven by the expansion of exports and increasing private investment. Nevertheless, the recovery may be slower than previously projected due to weaker economic momentum and slower recovery in household income, particularly among low-income groups. Public investment is also expected to expand at a low rate due to a delay in the FY2024 budget act.
Thai Policy Rate and Inflation
SCB EIC expects the Thai policy rate to remain at 2.5% throughout 2024, considered as a neutral rate in line with long-term potential and inflation targets. However, inflation is expected to accelerate somewhat due to supply-side pressures and the Digital Wallet scheme, although the impact on inflation is expected to be limited. Additionally, the Thai baht is expected to stabilize within a certain range for the remainder of 2023 and strengthen at the end of 2024.
Global Economic Outlook for 2024
The global economy is expected to slow to 2.5% growth in 2024, with potential risk factors such as monetary policy tightening, slowing Chinese economy, and geopolitical issues. In the long term, SCB EIC is concerned about the Thai economy growing at a lower rate due to structural issues such as low investment, lower total factor productivity, and the lingering effects of the Covid-19 pandemic. The report also proposes solutions to address these structural issues through a set of “four enhancing policies” aimed at boosting household immunity, enhancing business competitiveness, improving national investment strategies, and promoting sustainability in the real sector.
Source : Outlook Quarter 4/2023
