Thailand's economy is projected to expand 3.9% in 2023 from 2.6% last year because of stronger demand from China, Europe and the US, private consumption growth and a recovery in tourism, says the World Bank in its semi-annual Thailand Economic Monitor.
Growth is expected to moderate to 3.6% next year and 3.4% in 2025, with tourism and private consumption remaining the primary drivers of growth while external demand weakens, according to the report.
Inflation is expected to ease in 2023 to 2% as global energy prices dip and face price caps, although when volatile food and energy prices are excluded, core inflation remains higher than before the pandemic.
The return of tourists, particularly from China, has strengthened the outlook for the industry.
Arrivals are projected to tally 28.5 million this year, 84% of the 2019 level, before reaching the 2019 rate by the second half of 2024.
Despite recent growth, risks remain tilted to the downside as weak global growth and political uncertainty pose key challenges to the near-term outlook, said the bank.
In addition, Thailand faces structural headwinds including an ageing population, climate pressure, declining export competitiveness and high household debt.
The report includes advice on coping with floods and droughts, offering recommendations on how the country can better protect lives and livelihoods in a changing climate.
Like many economies in the region, Thailand is acutely vulnerable to floods and droughts.
A more robust framework for effective climate adaptation will be needed to avoid the high costs associated with damage caused by floods and droughts.
"The frequency of floods and droughts, and the high human and economic cost associated with them, make climate change adaptation and water management important in Thailand," said Fabrizio Zarcone, World Bank country manager for Thailand.
"A more robust framework prioritising risk mitigation planning, investing in water resources infrastructure, and managing land and water use is needed."
Thailand ranks ninth globally in the Inform Risk Index for floods, just below Vietnam, Myanmar and Cambodia.
The public costs of floods and droughts are already substantial, and without appropriate climate change adaptation they are likely to grow, noted the report.
A major flood similar to the 2011 deluge could cost more than 10% of GDP in lost production in 2030, noted the lender.
Agriculture, which accounts for about 9% of GDP, is particularly vulnerable to water shortages, especially highly water-intensive rice production.
The Greater Bangkok area, where the majority of the population resides and the largest portion of GDP is generated, is also highly vulnerable to flood risks.
The report notes that progress has been made to better cope with floods and droughts.
Since it was established in 2017, the Office of the National Water Resources has supported the planning and execution of flood and drought mitigation measures.
In addition, the report recommends that following the 2018 Water Resources Act, the remaining legal and institutional reforms should be implemented, along with more robust cost-benefit assessments to prioritise suitable flood and drought prevention measures.
The latest advancements to improve water use efficiency, promote a circular economy and integrate nature-based solutions can also significantly contribute to enhancing resilience to floods and droughts, the report noted.