The Bank of Thailand reduced its growth projection for 2023 this month after GDP and the inflation rate were lower than forecast.
GDP growth was 1.8% in the second quarter this year, lower than the central bank's projection.
The softer growth was mainly attributed to external factors as the central bank plans to review its economic assessment this month, Bank of Thailand governor Sethaput Suthiwartnarueput said at a seminar on Tuesday.
The regulator projects economic growth for this year of 3.6%, with inflation expected within a target range of 1-3%. The central bank reported headline inflation in July of 0.38% and core inflation of 0.86%.
"We will review GDP growth and other economic data including inflation this month. Inflation will gradually return to the target range," Mr Sethaput said.
He said private consumption showed strong growth at 7.8% year-on-year in the second quarter this year, the highest in the past 20 years.
The growth was bolstered by rising income as more people were employed, in line with Thailand's recovery from the pandemic.
The recovery of tourism also supports private consumption. Tourism accounts for 11-12% of GDP and around 20% of overall employment, said Mr Sethaput.
Foreign arrivals remain in line with the central bank's projection, with 29 million expected this year.
However, spending per trip is lower than expected, attributed to the slow rebound of Chinese visitors as the mainland suffers from a sluggish economy, he said.
While exports and tourism spending this year have been lower than projected, Thailand's economic recovery is expected to continue in the second half of the year, said Mr Sethaput.
Private consumption and the tourism sector are expected to be the key factors driving economic expansion in the second half.
"The central bank is confident about the rising number of foreign tourists and private consumption growth for the remainder of this year through to next year. However, we have less confidence in export growth," he said.
Private investment is another key concern after its growth rate returned to the same level as before the 1997 financial crisis. However, regional economies such as Vietnam, Indonesia, the Philippines and South Korea posted strong growth for private investment following the crisis.
In addition, Mr Sethaput said the current policy interest rate is close to the neutral level.
"A neutral rate helps inflation stay in a sustainable range and GDP can grow at its potential of 3-4% without creating financial imbalances," he said.
Therefore, the central bank plans to ease up on the accelerator of monetary policy to support a soft landing for the economy, said Mr Sethaput.
The Bank of Thailand's Monetary Policy Committee (MPC) is scheduled to hold a meeting on Sept 27 to review the monetary policy.
The MPC has hiked the key rate by 175 basis points since August last year to 2.25% at present.