Thailand’s economy is projected to recover to its pre-pandemic level in 2022, but the pace of growth will be slower-than-expected in 2023 owing to global headwinds, according to “The Thailand Economic Monitor” latest release.
The Thailand Economic Monitor for December 2022: Fiscal Policy for a Resilient and Equitable Future, released today, finds that the Thai economy has shown resilience to recent global shocks. Economic growth accelerated to 4.5 percent in the third quarter of this year fueled by resurgent private consumption and strong tourism inflows following economic reopening in May and the authorities’ measures to mitigate cost-of-living pressures.
Tourism arrivals reached 45 percent of the pre-pandemic level in September, surpassing those in Indonesia and the Philippines.
Thai economy projected to expand by 3.4 percent in 2022
The Thai economy is projected to expand by 3.4 percent in 2022 and 3.6 percent in 2023. Growth in 2023 has been revised down by 0.7 percentage point compared to June projections reflecting faster-than-expected decline in global demand. Tourism sector recovery and private consumption will remain the major drivers of growth.
“As Thailand looks towards resuming its path towards high-income country status post-pandemic, raising adequate fiscal space will be necessary to meet the additional spending need and provide a fiscal buffer for future shocks”
Fabrizio Zarcone, World Bank Country Manager for Thailand.
Slowdown in exports growth
Most recently, Thailand experienced a significant slowdown in exports growth like other ASEAN peers, reflecting the impact of the global economic slowdown. Exports of goods are expected to contract by 2.1 percent in 2023, a sharp decline from the estimated expansion of 8.1 percent in 2022. This downward revision reflects weakening demand from the major trading partners, including China, the European Union, and the US.
Poverty projected to rise to 6.6 percent in 2022
According to the report, Thailand’s fiscal response to COVID-19 significantly mitigated the impact of the crisis on household welfare. Poverty is, however, projected to rise to 6.6 percent in 2022 from 6.3 percent in 2021 as the COVID-19 relief measures start to be phased out amid elevated inflation. Additional shocks, including a renewed spike in energy prices, may further erode fiscal space unless more targeted and cost-effective social assistance measures are introduced.