Outlook for stable gains
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Outlook for stable gains

World Bank cites stronger private consumption, tourism recovery

Thailand's economy is estimated to expand by 3.6% this year, up from 2.6% last year, supported by stronger private consumption, a recovery in the tourism sector and pent-up demand following China's reopening, according to the World Bank.

The 2023 outlook was unchanged from its forecast in December. The World Bank projects Thai economic growth of 3.7% in 2024.

Tourist arrivals are predicted to increase to 27 million in 2023, reaching 68% of the pre-pandemic level.

Arrivals are expected to surpass the record set in 2019 next year, according to the World Bank's East Asia and Pacific April 2023 Economic Update.

However, goods exports are expected to contract by 1.8% in US dollar terms this year, attributed to the global slowdown.

Investments will continue to expand, helped by robust foreign direct investment and accelerated disbursements of public investment projects, according to the report.

Headline inflation is projected to moderate to 3.2% in 2023, down from 6.1% in 2022. However, the second-round pressure from elevated input costs to core prices remains, said the World Bank.

The Bank of Thailand trimmed its economic growth projections this week to 3.6% this year and 3.8% next year, from previous forecasts of 3.7% and 3.9%, respectively, with a strong rebound in tourism driving the economy.

The central bank upgraded its outlook for foreign arrivals this year to 28 million from 22 million, while for 2024 the projected bumped up to 35 million from 31.5 million.

In a related matter, Thai banks will most likely have better performances this year because of lower credit costs and an uptick in loan growth, supported by a stronger economic recovery, according to Fitch Ratings.

Speaking at the Fitch Ratings' media briefing on Thailand's economic and bank outlook yesterday, Jindarat Sirisithichote, associate director of financial institutions at Fitch Ratings (Thailand), said it expects Thai banks' earnings to improve gradually in 2023 on declining credit costs and stronger loan growth.

Pressures will persist on asset quality as relief measures expire and banks gradually clear their backlog of restructured loans, said Fitch.

Thai banks continue to maintain strong buffers against downside risks.

Fitch recently upgraded its 2023 GDP forecast for Thailand to 4.0%, up from 3.8%, as it expects the tourism revival to gain more traction, underpinned by China's reopening.

Speaking at the same seminar, Somprawin Manprasert, chief economist of the Economic Intelligence Center (EIC) at Siam Commercial Bank, said the global economy should perform better than previously forecast, with China's economy posting stronger growth after reopening.

EIC upgraded its 2023 Thai growth forecast to 3.9% from 3.4% based on rebounds of the tourism and service sectors.

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