Although the Bank of Thailand's revised GDP growth forecast of 3.2-3.8% next year is possible, analysts are warning that an economic slowdown in China and the US means downside risks remain, while the effectiveness of government stimulus to ignite the economy is questioned.
Nattaporn Triratanasirikul, deputy managing director of Kasikorn Research Center (K-Research), said the central bank's forecast for 2024 is in line with the think tank's estimate, with its official forecast scheduled for release on Dec 12.
K-Research cut Thailand's 2023 growth outlook to 2.5%, from 3%, late last month as GDP expanded by only 1.5% in the third quarter, bringing expansion to 1.9% for the first nine months.
While private consumption continues to expand in the fourth quarter as the tourism recovery gains ground during the high season, public spending and investment would put pressure on the growth looking forward as the government's fiscal budget has been delayed, K-Research noted.
"We think the growth range of 3.2%-3.8% is possible for next year when the government's digital wallet initiative is launched to drive the consumption, but uncertainties still linger about this project," Ms Nattaporn told the Bangkok Post.
In addition, an economic slowdown in China and the US would certainly pose risks to the Thai economy, which is highly related to these two markets, she added.
CGS-CIMB Securities (Thailand) said that it had cut the country's GDP growth forecast for 2023 to 2.5%, from 3.2%, but maintained the 2024 estimate at 4% on the back of expected export growth of 3.7%.
"In order to fulfil our GDP growth forecast of 3.2% in 2023, fourth-quarter GDP growth needs to exceed 5% year-on-year, which we view as unachievable," said investment strategist Gun Hathaisattha.
Looking forward to next year, he said CGS-CIMB has not ruled out the possibility of the global economy falling into recession as "high interest rates last longer than previously expected".
As a result, there is a chance that the global economy faces a more severe slowdown than the market expected, said Mr Gun.
Maybank Securities expects Thai GDP growth to rise to 3.6% in 2024, from 2.3% this year, and CPI inflation to accelerate to 1.8%, from 1.3% this year.
The Bank of Thailand believes that goods exports and tourism have recovered more slowly than expected due to subdued growth in China and a delayed upturn in global electronics demand. Total foreign arrivals are targeted to climb from 28.3 million this year to 34.5 million in 2024, which is still below the pre-pandemic level of 40 million in 2019.
Meanwhile, the projected growth boost from the digital wallet scheme implicitly assumes a very low fiscal multiplier, roughly below 0.3x if 500 billion baht was disbursed for this project.
"We do not rule out the wallet's possible dampening effect on public spending, if fiscal outlays in other areas are cut to accommodate it," the Malaysian brokerage added.