Economic growth in Southeast Asia is forecast to drop from 5.6% in 2022 to 4.6% this year, pressured by weaker demand as the global economy slows, says the Organisation for Economic Co-operation and Development (OECD).
According to the OECD's Economic Outlook for Southeast Asia, China, and India 2023 report, Thailand's economic growth is projected to increase from 2.6% last year to 3.8% in 2023, ranking sixth among regional economies.
Despite the global economic slowdown and weaker demand, Thai GDP is expected to expand by 3.8% in 2024.
Vietnam is projected to have the highest GDP growth this year at 6.4%, followed by the Philippines (5.7%) and Cambodia (5.4%). The OECD expects Singapore and Myanmar to have the lowest economic growth in the region, at 2.2% and 2%, respectively.
The report said the key factors stunting growth in Southeast Asia this year are persistent inflation and a global economic slowdown.
The current inflation level in the region is moderate and below the average of OECD countries, though the level should persist, according to the report.
Kensuke Molnar-Tanaka, head of the Asia desk at the OECD Development Centre, said trade was strong for many countries in the region last year, but slowed from the fourth quarter of 2022.
"Trade is projected to weaken this year, hampered by the global economic slowdown," said Mr Molnar-Tanaka.
"Supply-side bottlenecks are also hindering global trade. However, this is expected to be offset by China's reopening. Cross-border flows from China will be an important source in the region."
Alisara Mahasandana, assistant governor at the Bank of Thailand, said during the report launch that China's border reopening would benefit the tourism and export sectors in Thailand this year.
"Thailand's recovery has gained firmer ground mainly because of the return of Chinese tourists. We were hit harder by the pandemic than other countries in the region because the Thai economy highly depends on tourism," said Mrs Alisara.
"When the tourism sector recovers, improvement in income and employment will lead to increasing private consumption and domestic demand."
According to the OECD, China's projected growth this year is 5.3%, up from 3% last year.
However, economic activity in China early this year is expected to be suppressed by an increase in Covid-19 cases.
"Continued pent-up regional demand for tourism is expected to partially offset weak exports of goods," noted the report.
"The removal of China's zero-Covid policy should boost tourist arrivals in the region, helping economies that rely on international tourism revenues."