Growth outlook darkens
World Bank slashes its Thai GDP forecast
Thailand's economy is expected to grow by 2.9% this year, down from a previous prediction of 3.9%, the World Bank said on Tuesday.
Warunthorn Puthong, an economist at the World Bank, said the downgrade was mainly due to external risk factors such as the Russia-Ukraine war, which has sent domestic energy prices soaring.
The energy factor has pushed up costs and affected private consumption in the country. The rising price of global energy, which has pressured the world's economic expansion, could also impact Thailand's exports, Ms Warunthorn said.
However, the World Bank believes the Thai economy is on the path to recovery this year. Positive factors include the country's reopening and the easing of pandemic restrictions.
The World Bank expects 6.2 million foreign tourists to visit Thailand this year, she said.
If the impact of the war in Ukraine becomes more severe for Thailand, the economy might expand by only 2.6%, Ms Warunthorn said.
The Thai economy expanded by 1.6% in 2021, following a contraction of 6.2% in 2020.
The war in Ukraine threatens an uneven recovery for developing East Asia and Pacific (EAP) countries, the World Bank said.
The war comes as the region is recovering from the economic distress caused by the lingering pandemic, financial tightening in the US, and the resurgence of Covid-19 infections in China.
Shocks emanating from the war in Ukraine and the sanctions on Russia are disrupting the supply of commodities, increasing financial stress, and dampening global growth, according to a report titled "World Bank East Asia and Pacific Economic Update April 2022: Braving the Storms".
Countries in the region that are large importers of fuel (Mongolia and Thailand) and food (the Pacific Islands) are seeing a decline in real incomes. Countries with large debts (Laos and Mongolia) or a high dependence on exports (Malaysia and Vietnam) are susceptible to global financial and growth shocks, according to the report.
"Just as the economies of East Asia and the Pacific were recovering from the pandemic-induced shock, the war in Ukraine is weighing on growth momentum," said Manuela V. Ferro, World Bank vice-president for EAP.
"The region's largely strong fundamentals and sound policies should help it weather these storms."
The EAP region is projected to grow by 5% this year, down from a 5.4% projection last October. Expansion could slow to 4% if global conditions worsen and national policy responses are weak.