The National Economic and Social Development Council (NESDC) has revised down gross domestic product (GDP) growth for 2023 and its outlook for 2024 to 1.9% and 2.7%, suggesting the Bank of Thailand (BoT) use financial measures to support the economy, says secretary-general Danucha Pichayanan.
The NESDC on Monday announced the results of economic expansion in 2023 and its growth forecast for 2024, which were lower than its previous forecasts of 2.5% and 2.7-3.7% (with an average of 3.2%), respectively.
Mr Danucha said that to help propel the economy and reduce the burden on households and small and medium-sized enterprises (SMEs), the BoT should seriously consider measures to reduce interest rates, in particular the net interest margin (NIM), which is currently high at around 5%.
"In the recent past, the government undertook many stimulus measures to revive tourism, support investment, and expedite the disbursement of the state budget. As a next step, the government should use financial measures to support the economy," Mr Danucha said.
The state planning agency wants financial institutions to reduce the NIM to help SMEs and households with their debt burden. Meanwhile, the NIM has no significant impact on large businesses.
Mr Danucha said the central bank should extend its debt assistance measures by maintaining the minimum payment rate for credit card debt at 5% for a period of time (it expired at the end of December last year) compared with the current rate of 8% to prevent non-performing loans (NPLs) among SMEs and householders.
In 2023, public investment and public consumption contracted by 4.6% compared to 2022 due to a delay in the disbursement of the fiscal 2023 budget as a result of the general election.
Exports of goods and services in 2023 expanded by 2.1%, down from 6.1% in 2022. Meanwhile, the value of exported goods in US dollar terms is expected to decline by 1.7%, compared with a 5.4% growth in 2022.
Import volumes contracted by 2.2% compared with a 3.6% expansion in 2022.
GDP growth in 2024, which is expected to expand in the range of 2.2-3.2%, with an average of 2.7%, is attributed to many positive factors. Public investment is expected to decrease by 1.8%, public consumption is anticipated to increase by 1.5%, and private investment and private consumption is expected to expand by 3.5% and 3%, respectively.
Government investment is expected to be less negative, remaining at negative 1.8%. Government consumption is positive at 1.5%, while private investment and private consumption expanded by 3.5% and 3%, respectively.
In 2024, exports of goods and services are anticipated to expand by 5% while the export value of goods in US dollar terms is expected to return to positive growth of 2.9%.
Import volumes will expand by 3% in 2024.
The export sector will be a key driver of the economy this year, coupled with the expansion of private investment. Meanwhile, domestic consumption continues to be supported by low inflationary pressure and low unemployment.
However, the Thai economy is still risky in 2024 due to the delay of state budget planning for fiscal 2024 for seven months, swelling household debt especially special mention (SM) auto loans, drought, volatility in the global financial system, and geopolitical tensions around the world.
China's economy still has internal problems, particularly the liquidity crunch in its real estate sector, which may have an impact on Thailand's export sector.