Thailand's export-led economy is expected to grow more slowly than the Asia-Pacific average this year amid global uncertainties and baht appreciation, says the United Nations Economic and Social Commission for Asia and the Pacific (Escap).
In the Economic and Social Survey of Asia and the Pacific 2013, Escap forecasts the Thai economy will grow 5.3% in 2013, down from 6.4% last year, on improved but tepid global trade.
Meanwhile, the expected improvement in global demand arising from steady growth in the US and a limited rebound in major emerging economies is projected to raise developing Asia-Pacific growth to 6% this year from 5.6%.
"Private consumption in Thailand should remain strong, supported by higher wages and modest inflation, although fiscal schemes such as the waived excise tax for first-car purchases have expired," said the report.
Aynul Hasan, chief of development policy at Escap's macroeconomic division, said global uncertainties such as Cyprus's debt and falling gold prices will affect Thailand's growth.
"The stronger baht will affect Thailand's exports, and volatile capital inflows are something Thailand should be cautious about," said Mr Hasan.
"To guard against the impact of liquidity injections in advanced economies, particularly on exchange rates and asset prices, some Southeast Asian countries are limiting currency forwards, imposing capital controls and promoting capital outflows," said the report.
"Thailand lifted the limit on individual direct investments abroad but this action has raised concerns that long-term funds are being traded for short-term funds, making the country more vulnerable to a sharp capital reversal."
Mr Hasan said Thailand's outlook also depends on how quickly public investment in the water management plan moves forward. Adjustment to the nationwide minimum wage hike to 300 baht per day could also affect growth performance, especially among small and medium-sized enterprises.
However, the wage hike is anticipated to boost job growth by 0.6% and GDP growth by 0.7% by 2015.
"If designed carefully along with supportive adjustment measures, the wage hike will boost prospects without adversely affecting businesses," he said.