Thailand's economic growth is expected at 2.5% this year before accelerating to 3.2% in 2024, supported by a recovery in tourism, exports and sustained private consumption, the World Bank said on Thursday.
The growth outlook for 2023 and 2024 was reduced from 3.4% and 3.5% estimated in October, respectively. Southeast Asia's second-largest economy expanded 2.6% in 2022.
Growth in 2023 was dampened by a contraction in exports as well as ongoing fiscal consolidation, the World Bank said.
Tourism and private consumption will be key growth drivers while exports are expected to rebound due to favourable global trade despite the slowing Chinese economy, the bank said in its Thailand Economic Monitor.
Tourism is projected to return to pre-coronavirus-pandemic levels in mid-2025, set back by the Chinese slowdown, while economic growth is forecast at 3.1% in 2025, the World Bank said.
The government’s planned digital wallet programme, potentially amounting to 2.7% of gross domestic product (GDP), could boost near-term growth further by 0.5 to 1 percentage points over the two-year period in 2024 and 2025 if implemented, the bank said.
As a result, the fiscal deficit may increase to 4% to 5% of GDP, while public debt may reach 65% to 66% of GDP, up from around 60% now, it said.
Heightened geopolitical conflict and high oil prices, which could lead to another inflationary surge in Thailand due to its high dependence on energy imports, pose downside risks to the outlook, the World Bank said.
In a related development, Deputy Finance Minister Krisada Chinavicharana said the country’s economic stability remains strong despite a recent sell-off in the Stock Exchange of Thailand.
The decline in the SET Index, he said, did not reflect confidence in the economy or its stability.
The main stock index hit a three-year low on Wednesday and has dropped by 18% so far this year, with foreign investors selling 199 billion baht worth of Thai shares.
“It could be a specific issue in the capital market, which we will have to find out,” Mr Krisada told reporters on Thursday.
The SET index rallied about 1.3% on Thursday in line with regional markets after the US Federal Reserve indicated that its tightening cycle is likely over and flagged interest-rate cuts next year.