The Finance Ministry on Monday downgraded its economic growth forecast to 2.4% for this year, down from its previous projection of 2.8% in January.
Pornchai Thiraveja, director-general of the Fiscal Policy Office (FPO) under the Finance Ministry, said the Thai economy is now facing four key challenges, including lower-than-expected exports, especially in industrial goods.
Additionally, manufacturing has also contracted, as evidenced by the Manufacturing Production Index, particularly in categories such as automobiles and electronic circuits.
Furthermore, the agricultural sector has been impacted by droughts stemming from the El Niño phenomenon, while government money is yet to be fully disbursed as the fiscal budget expenditure act was only announced on April 26. This would result in a six-month delay in the fiscal 2024 expenditure budget.
The ministry also cut its projection for the country’s export growth to 2.3%, down from January's 4.2% estimate, while lowering its inflation outlook to 0.6%, from 1% earlier.
Nevertheless, Mr Pornchai said that if the 500-billion-baht digital wallet funds were spent in the fourth quarter of this year, expenditure in the fourth quarter is estimated to be around 350 billion baht, which would increase the country's GDP growth to 3-3.3% this year.
According to Mr Pornchai, in the latter half of this year the FPO aims to drive the economy by accelerating budget disbursement in the remaining period of the 2024 fiscal year as well as through an influx of foreign tourists.
Regarding the expenditure budget for the 2024 fiscal year of 3.48 trillion baht that has already come into effect, the FPO expects overall spending to reach 92.3% of the expenditure budget, while investment spending, which plays a significant role in driving the economy, is expected to reach 64%.
According to Mr Pornchai, the latest economic growth forecast was based on five significant assumptions, including the expansion of the economies of Thailand's 15 major trading partners, which are expected to grow on average by 3.1% this year, up from the previous forecast in January of 2.8%.
The Thai baht exchange rate in 2024 is expected to be 36 baht per dollar, 3.4% weaker than the previous year, which is beneficial for Thailand's exports, while Dubai crude oil prices this year are expected to be US$86 per barrel, higher than the previous forecast of $82.
Thailand is expected to receive 35.7 million tourists this year, up from 33.5 million in the previous forecast, while the overall disbursement of public expenditure is estimated at 92.3% of the overall budget, with that of regular spending at 99.5%, and investment expenditure at 64%.