The Fiscal Policy Office (FPO) has downgraded its forecast for Thai economic growth this year to 3.6% from 3.8%, mostly based on expectations of an export contraction.
FPO director-general Pornchai Thiraveja said on Tuesday that despite positive indicators in other sectors, especially tourism, the export outlook in United State dollar terms is expected to contract this year by 0.5% from a previous forecast of 0.4% growth.
He attributed the expected export decline to weakening global demand.
Thai GDP expanded 2.6% year-on-year in 2022.
The office predicts 29.5 million foreign tourist arrivals this year, up from 27.5 million forecast in January. It expects 1.3 trillion baht in revenue from foreign tourist arrivals this year. In 2019, Thailand recorded nearly 40 million foreign tourist arrivals with spending of 1.91 trillion baht.
Inflationary pressures have declined in line with falling oil prices. The office projects an average Dubai crude oil price of US$82 per barrel this year, down 14% from last year.
The office expects private consumption to expand 4.1% this year, in line with the economic recovery, while private investment is forecast to expand by 2.3%.
Public consumption is expected to fall by 2.1%, while public investment is forecast to expand by 2.6%.
Mr Pornchai said the FPO projects inflation of 2.6% this year, down from the 2.8% rate it forecast in January. He said high power prices would not push up the inflation rate as electricity accounts for only 5.5% of the inflation basket.
Thailand's current account is likely to post a surplus of $4.2 billion this year because of the rising number of foreign tourist arrivals, said the FPO.
Earlier this week Bank of Thailand governor Sethaput Suthiwartnarueput said the country's economic recovery pace remains intact, mainly supported by rising domestic consumption and the tourism sector. The central bank forecasts a Thai growth rate of 3.6% this year.
The bank predicts 28 million foreign tourist arrivals this year -- 12 million in the first half and 16 million in the second half.
The export sector is expected to be affected by global economic uncertainties and the US economic slowdown, according to the central bank.