Central bank set to cut growth outlook

Central bank set to cut growth outlook

Bank of Thailand. (File photo)
Bank of Thailand. (File photo)

The Bank of Thailand (BoT) is likely to slash the country's gross domestic product (GDP) outlook for 2024 after growth in the fourth quarter of last year was weaker than expected.

As a result, the central bank may cut the GDP growth forecast for both 2023 and 2024, said Sakkapop Panyanukul, senior director for financial markets at the bank.

According to its latest base-case assessment in November last year, the BoT forecasts GDP growth in 2024 of 3.2% without the digital wallet scheme.

If the stimulus package is implemented, the country's economic growth would increase to 3.8% this year.

The regulator predicted GDP growth in 2023 of 2.4%.

Mr Sakkapop said the Bank of Thailand's Monetary Policy Committee (MPC) is scheduled to hold a meeting on Feb 7 to consider both monetary policy direction and an economic review.

On Wednesday the central bank reported that the Thai economy in the fourth quarter of last year slowed from the previous quarter. Tourist spending and the value of merchandise exports, excluding gold, softened as global demand eased, with structural factors negatively affecting manufacturing and private investment.

Private consumption and activities in the service sector continued to improve and are expected to remain the key growth driver this year, noted the regulator.

He said the softer growth would be affected by external risks from both economic uncertainties and geopolitical tensions, impeding the country's export and manufacturing sectors.

In addition, internal risks could reduce the country's competitiveness, said Mr Sakkapop, though the tourism sector is expected to remain a key driver of economic growth.

Under a base-case scenario, the central bank expects foreign tourist arrivals to reach 34.5 million this year, rising from 28.3 million in 2023.

In addition, economic growth would also be supported by improving private consumption.

With the latest economic indicator, private consumption grew by 7% in the final quarter of last year.

There are some concerns about an economic crisis after the Fiscal Policy Office announced last week that GDP expanded by only 1.8% in 2023.

The growth is lower than the previous forecast by almost one percentage point, attributed to many negative factors affecting the economy.

Chayawadee Chai-Anant, assistant governor for the corporate relations group at the BoT, said the definition of an economic crisis varies from one entity to another.

Under the macroeconomic definition, the economy has recovered slowly, she said.

In terms of microeconomics, some fragile individuals and businesses are still suffering from slower "patch growth", said Ms Chayawadee.

The BoT has implemented targeted measures, particularly though its debt restructuring programme, to assist vulnerable borrowers, she said.

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