The Bank of Thailand projects 2.9% growth in the first half of the year and 4.2% in the second, indicating that Thailand’s economic recovery is still on track.
With the central bank gradually normalizing interest rates, Thailand’s economic growth is predicted to be 2.9% in the first half of 2023 and 4.2% in the second.
Exports are expected to be flat for the year despite the economic rebound, and annual inflation is moving at the slowest rate in 22 months.
By the end of July, the country will have welcomed more than 15 million foreign visitors, with 29 million predicted in 2023.
It is anticipated that the Thai economy would keep growing, primarily due to tourism and individual consumption. The target range for headline inflation has once again been reached, but there are still upside risks due to increasing demand pressures and stronger cost pass-through from supply concerns.
The ongoing rebound in the tourism industry and an increase in private consumption are predicted to propel the Thai economy’s 3.6% growth in 2023 and 3.8% growth in 2024. In 2023 and 2024, respectively, 29 and 35.5 million foreign visitors are anticipated.
The general financial system is still stable, but it is still important to keep a close eye on the volatility and developments of the financial markets, as well as the ability of SMEs and low-income households to service their debt.
August is likely to see a rate increase.
The Monetary Policy Committee unanimously decided to increase the policy rate by 0.25 percentage points, from 1.75% to 2.00%, during its meeting on May 31, 2023. The MPC believes that given the GDP and inflation prospects, a gradual normalization of policy is justified.
To promote economic growth and control inflation, the central bank intends to gradually boost interest rates. However, the central bank’s target range for inflation has been missed, and exports are predicted to remain flat for the year.
The BoT will most likely continue raising rates at its next meeting in August despite this.
29 million visitors from abroad this year
Exports of goods are slowly rebounding and will likely accelerate in the second half of 2023. Higher-than-anticipated international visitor arrivals and a bigger stimulus from the new government’s economic plans are two positive risks to Thailand’s GDP prospects.
The estimate for trading partner growth in 2022 has been upgraded
Due to stronger-than-anticipated results in the US, the euro area, and China, a prolonged global economic recovery backed by growth in the services sector, and a rebound in investment and the real estate sector in China, the prognosis for trade partners’ growth in 2022 is upgraded.
Due to the large base effect, tighter financial conditions, and perhaps slower recovery in Asian exports, the prediction for 2024 has been somewhat revised downward. Because of the tighter financial conditions and the gradual drop in inflation, the federal funds rate is lowered down during the course of the projected period.
Local currencies will increase
Due to the recovery in the services industry, a rise in tourism, and a recovery in exports in the second half of 2023, regional currencies (apart from the Chinese yuan) would increase. Although Dubai crude oil prices would remain constant during the projection period, the supply of crude oil is likely to tighten as a result of further production restrictions by OPEC+ that would go into effect in May and a recovery in Chinese demand in the second half of the year.
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