The National Economic and Social Development Council (NESDC) has revised its forecast for this year’s economic growth to 2.5-3%, down from the previous forecast of 2.7-3.7% due to the impact of the global economic slowdown, says secretary-general Danucha Pichayanan.
He said during a press conference on Thailand’s economic performance in the second quarter of 2023 and the economic projection for 2023 that the delayed formation of the new government would affect the 2024 fiscal budget disbursement, which is expected to be delayed to April next year or could be delayed by up to six months from the existing schedule of the third quarter of 2023. The delay could also affect the disbursement of the government’s investment budget in the fourth quarter of this calendar year. Moreover, if any political violence occurs during the transition to the next government, it may dampen domestic consumption and foreign investment.
Exports in the second quarter of 2023 contracted by 5.6% for the third consecutive quarter compared to the same period last year. In the first half of 2023, the value of exports stood at US$140 billion, a 5.1% contraction from the same period last year, due to a 6% drop in export volumes. The value of exports increased by 1.1%, easing from 2% in the previous quarter.
Export volumes for the whole of 2023 are expected to fall by 1.8%, compared with a 1.1% decline in the previous estimate.
According to the NESDC, the slowdown of major economies and the weaker than anticipated Chinese economic recovery would affect Thai exports.
The US is expected to expand by 1.2% this year, compared with 2.1% growth last year, while the EU is expected to grow
‘‘ The new government should find more potential export markets for Thai products. DANUCHA PICHAYANAN Secretary-general, National Economic and Social Development Council
by 0.8% this year, compared with 3.5% last year. Japan is expected to expand by 1.5%, compared with 1% in 2022, and China is expected to expand 4.9%, compared with 3% last year.
The NESDC believes that China’s slower than anticipated economic recovery is because of low consumer demand and private investment, trade restrictions from the US and its allies, and its high level of public debt at 51.5% in the first quarter of this year.
Mr Danucha said the new government should find more potential export markets for Thai products and enhance the production process by using new technology and innovation in order to improve competitiveness.
However, if the 2024 Budget Expenditure Act cannot become effective in time for the start of the 2024 fiscal year on Oct 1, the previous year’s expenditure budget could still be used by the government for current spending and accrued investment expenditure.
The NESDC expects 28 million foreign tourist arrivals in 2023. For the first half of 2023, the number of foreign tourist arrivals stood at 12.9 million.
Private consumption expenditure is expected to increase by 5%, continuing from 6.3% growth in 2022 and an upward revision from 3.7% in the previous estimate, owing to an improvement in the labour market and income base from the non-agricultural sectors, particularly those related to tourism.
Total investment is expected to increase by 1.6%, a downward revision from a 2.1% expansion in the previous estimate. The decline in private investment was in line with the decline in export and import of goods, while the decline in public investment was in line with the delayed 2024 fiscal budget disbursement.
In the second quarter of 2023 the economy expanded by 1.8%, down from 2.6% in the previous quarter. In the first half of 2023, the economy grew by 2.2%.
On economic stability, the unemployment rate stood at 1.06% of the country’s labour force in the second quarter of 2023, representing 429,000 people, less than the 1.37% in the previous quarter.