The National Economic and Social Development Council (NESDC) has cut Thailand's GDP growth for this year to 2.5%, but expects expansion of 3.2% next year as export momentum begins to improve, said secretary-general Danucha Pichayanan.
The NESDC has continuously revised downwards GDP growth from 3.2% in the first quarter, 2.7% in the second quarter, and 2.5% in the third quarter, following a 2.6% expansion last year.
Prime Minister Srettha Thavisin was alarmed by GDP figures in the third quarter, which expanded by only 1.5%, and insisted that the economy was in crisis and urgently required economic stimulus for a restart.
On the other hand, Move Forward Party deputy leader Sirikanya Tansakun insisted that the economy was not in crisis, but had contracted due to weakening exports as a result of the global economic slowdown and reduced public investment.
NESDC predicted a 2% contraction in exports, a key driver of Thai growth, for this year, compared to an expansion of 5.4% in 2022.
Private consumption is projected to expand by 7%, while public consumption is expected to dip by 4.2%.
Private investment is forecast to grow by 2% while public investment is expected to contract by 0.8%, attributed to a delay in the fiscal 2024 expenditure budget.
In terms of internal stability, the headline inflation is expected to be 1.4%.
With regard to external stability, the current account is projected to record a surplus of 1% of GDP.
For 2024, NESDC forecasts expansion in a range of 2.7% to 3.7%, with an average of 3.2%.
Exports are expected to expand by 3.8%.
This photo taken on Saturday November 9, 2023 shows people walking past street art at Ratchaprasong skywalk in Bangkok central business district. Apichart Jinakul
Private consumption and public consumption is projected to expand by 3.2% and 2.2%, respectively.
Headline inflation is estimated to be in the range of 1.7-2.7%, and the current account is projected to record a surplus of 1.5% of GDP.
GDP in the third quarter expanded 1.5% from the same period of last year, slowing down from 1.8% growth in the second quarter.
Thailand's economy grew much slower than expected in the third quarter, weighed down by contracting exports for four consecutive quarters, despite signs of recovery in August and September.
According to the NESDC, there are numerous risk factors for next year.
First is the 2024 fiscal budget disbursement, which is expected to be delayed to April next year or 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.
Therefore, government agencies with investment budgets must prepare procurement plans to help speed up budget disbursement.
Second, the government needs to prepare to create a state revenue base which is sufficient to absorb risks next year.
Government revenue collection accounts for only 14-15% of GDP at present.
Therefore, the government must implement tax reforms to increase revenue in order to cover expenses and deal with future economic uncertainties.
"The government must prepare sufficient fiscal space to support crises, especially those arising from current geopolitical conflicts, and the slower than anticipated economic recovery of China, which is Thailand's main trading partner," Mr Danucha said.
"During Covid, the government needed to borrow money to sustain the economy, causing the government's fiscal space of 16% of GDP to quickly diminish while the level of public debt increased from 40% to 60% of GDP."
Third, household and corporate debt levels have increased during the pandemic and could be a drag on growth. The sharp increase in debt levels is particularly pronounced for households, reaching 90.7% of GDP in 2021.
Meanwhile, corporate debt, especially debt in the SME group, requires cooperation from commercial banks for debt restructuring, particularly construction businesses which face budget delays in 2024.