The World Bank is slightly less optimistic on Thailand's economic outlook, cutting the forecast to 3.8% growth this year in line with the global economic slowdown, but maintaining its growth projection at 3.9% for next year.
Thailand is in line for a slight economic slowdown in 2019, according to the World Bank's Thailand Economic Monitor report. Public infrastructure spending is expected to accelerate this year and pick up in 2020 as the Eastern Economic Corridor projects are implemented.
"Weaker global growth will likely impact the export performance of Thailand and restrain manufacturing activities in export-oriented industries," said Kiatipong Ariyapruchya, the World Bank's senior economist for Thailand. "In this context, continued implementation of public infrastructure projects and economic reforms can help catalyse domestic demand in 2019 and support medium-term growth."
The Washington-based multinational lender in October predicted that Thailand's economy would expand by 3.9% this year and next.
The balance of risks is tilted to the downside, as investors may hold back private investment in export-driven industries amid heightened global uncertainty, the report said.
Moreover, the recent and expected interest-rate hikes in the US and in some developed economies could lead to some financial market turbulence and sudden retrenchment of capital inflows from emerging-market economies.
On the domestic front, persistently low disbursement rates of the capital expenditure budget, fiscal fragmentation and political uncertainty all remain risks for timely implementation of large public infrastructure projects.
Headline inflation is unlikely to deviate from the target range of 1-4% amid anchored inflationary expectations and a gradual recovery.
Monetary and fiscal buffers are expected to remain adequate with room for further expansion to support economic activity, if needed. Moreover, public debt remains low at 42% of GDP.
In 2018, despite external shocks to trade and tourism, Thai economic growth is estimated to have accelerated to 4.1%, the report said.
The economy proved resilient in the face of strong global headwinds because of strengthening domestic demand stemming from an upswing in private consumption and private investment.
In related news, the World Bank said investing in human capital and pursuing economic reforms are critically important for Thailand to become a high-income nation with equal opportunities for all citizens.
"Sustaining the pace and quality of structural reforms will be crucial for reducing poverty and raising Thailand's long-term growth path above 4% in the face of demographic challenges caused by rapid ageing," said Birgit Hansl, the World Bank's country manager for Thailand. "To build a better future for all Thais, an emphasis on human capital investment is key. Addressing priority areas in education and health can go a long way in equalising opportunities for the next generation."