According to the latest data released by the National Economic and Social Development Council on Feb 17, Thailand's real GDP growth slowed significantly to 1.4% year-on-year in the fourth quarter of 2022 from 4.6% in the third quarter.
The fourth-quarter figure was a major miss from consensus estimates of 3.5% and lowered full-year growth to 2.6%.
The main drag on headline GDP growth was goods exports, which contracted by 10.5% year-on-year, while government consumption also declined by 8.0%.
On a seasonally adjusted basis, GDP contracted by 1.5% quarter-on-quarter in the fourth quarter.
Our prevailing forecast is for the Thai economy to expand by 3.6% in 2023. However, we will likely be lowering that forecast over the coming days given that the extent of external demand weakness appears to be more severe than we previously expected.
We maintain our view that the Thai economy is likely to expand at a quicker pace in 2023 than in 2022 for three reasons.
First, we expect a continued recovery of the crucial tourism sector over the coming quarters. The country received just over 11 million visitors in 2022, up from 428,000 in 2021, yet still a far cry from the nearly 40 million arrivals the country registered in 2019.
Some government estimates project foreign arrivals of 30 million this year.
Second, the general election is expected in early May and election-related spending will likely provide a modest boost to growth.
Lastly, while goods shipments are likely to weaken in line with the global growth slowdown, China's economic recovery should provide some support because it is Thailand's second-largest export destination, accounting for 14% of total outbound shipments.