The Thai economy is projected to recover faster than expected this year, but will face slower growth in 2023 because of global headwinds, according to the World Bank.
Thailand's economic growth is estimated to expand by 3.4% in 2022, exceeding the 2.9% World Bank projection made in June.
Growth was supported by stronger private consumption and services exports thanks to the nascent tourism recovery and strong pent-up demand after the relaxation of lockdown measures and travel restrictions, according to the World Bank report "Thailand Economic Monitor: Fiscal Policy for a Resilient and Equitable Future" released on Wednesday.
GDP is expected to continue to expand in 2023 and 2024 at 3.6% and 3.7%, respectively, with the tourism recovery and private consumption remaining the major drivers of growth.
The growth forecast in 2023 was downgraded by 0.7 percentage points from the June forecast, reflecting the impact of the global economic slowdown on goods trade and investment, said the report.
Exports of goods are expected to contract by 2.1% in US dollar terms in 2023, a sharp decline from the projected expansion of 8.1% in 2022, reflecting weakening demand from major trading partners, including the US, the eurozone and China.
The country's current account balance is expected to reverse from its deep deficit over the past two years and return to positive territory in 2023, driven by the tourism rebound alongside declining global shipping costs.
Headline inflation is projected at 6.2% in 2022 -- a 24-year high driven mainly by higher fuel and transport costs, raw food and prepared food prices.
Headline inflation is projected to decelerate to 3.2% in 2023 as global crude oil and food prices moderate, but will remain above the Bank of Thailand's target range of 1-3% through the first half of 2023.
According to the report, the Thai economy has shown resilience to recent global shocks.
Economic growth accelerated to 4.5% in the third quarter, fuelled by resurgent private consumption and strong tourism inflows, following economic reopening in May and state measures to mitigate cost-of-living pressures.
As Thailand looks to resume its path towards high-income country status post-pandemic, raising adequate fiscal space will be necessary to meet the additional spending and provide a fiscal buffer against future shocks, said Fabrizio Zarcone, World Bank country manager for Thailand.
The report also recommends improving job and earning opportunities among low-income groups, while creating fiscal space to achieve adequate spending on social assistance for the most vulnerable groups.
Financing the necessary public investments in physical and digital infrastructure and human capital to promote growth and human development in the longer term will also be critical for achieving sustainable poverty reduction, said the bank.
Giving the keynote remarks at the World Bank's report launch on Wednesday, Finance Minister Arkhom Termpittayapaisith said he expects GDP growth of 3.4% this year and 3.8% next year, while inflation has already peaked.
He said economic growth has been stable, despite challenges in recent years including the pandemic, geopolitical conflicts and the high global oil prices.
Mr Arkhom predicts around 10 million foreign tourists this year, rising to 21 million next year.