The Fiscal Policy Office (FPO) has downgraded its 2022 economic growth forecast to an average of 3.5% from 4.0%, mainly because of the Russia-Ukraine war and its effect on domestic energy prices, says FPO director Pornchai Thiraveja.
He said the FPO expects economic growth to be in a range of 3-4%, compared with a previous range in January of 3.5-4.5%.
Mr Pornchai said the Thai economy should expand faster this year than in 2021, when it grew only 1.6%.
The war has resulted in a spike in domestic energy prices and the inflation rate, in addition to slowing the economies of Thailand's trading partners, especially countries in the EU as well as the US, he said at a press conference on Wednesday on the FPO's quarterly economic review.
The office changed its expected 2022 headline inflation rate to 5%, up from a previous estimate of 1.9%.
In addition, the FPO cut its forecast for the economic growth of 15 Thai trade partners to 4% this year, down from 4.4% in January.
Positive factors for the Thai economy in 2022 include growing domestic spending. Private consumption is expected to expand by 4.3% this year, in a range of 3.8-4.8%, while 6.1 million foreign tourists are expected to arrive as the country continues to ease entry restrictions.
There were roughly 400,000 foreign tourists in Thailand in 2021.
The FPO upgraded its forecast for export growth this year to 6%, in a range of 5.5-6.5%, from the previous projection of 3.6%.
Mr Pornchai said government policies will play a key role in supporting economic expansion.
The government allocated annual expenditure of 3.1 trillion baht for fiscal 2022, with an investment budget for state enterprises of 318 billion baht.
The FPO predicts state investment this year will expand 4.6%, while private sector investment will grow 4.5%.
He said economic risk factors include the impact of the Russia-Ukraine war, the uncertain pandemic situation, and risks from global economic and financial volatilities.