The State of The Thai Economy Right Now

The International Monetary Fund (IMF) has forecast that Thailand’s economy will grow by 2.7 percent in 2023, slightly higher than the 2.6 percent growth seen in 2022. However, the IMF warned that the outlook is highly uncertain and that downside risks prevail.

The IMF’s assessment is based on its discussions with Thai officials during its most recent Article IV consultation, which took place between October 24 and November 7.

“Thailand’s economy expanded by 2.6 percent in 2022, and by 2.2 percent in the first half of 2023, as the large increase in commodity prices since 2022, faster-than-expected monetary policy normalization in advanced economies, global financial turmoil, and the slowdown in China have slowed the recovery,” said Corinne Deléchat, IMF Mission Chief for Thailand.

Ms. Deléchat noted that the Thai authorities have gradually tightened monetary and fiscal policies while mitigating the impact of high inflation on the population and safeguarding financial stability.

Looking ahead, the IMF expects Thailand’s growth to accelerate to 3.6 percent in 2024, driven by improvements in external demand and continued solid growth in private consumption. However, the IMF warned that the outlook is highly uncertain and that downside risks prevail, including the possibility of further increases in commodity prices, a slowdown in China, and heightened global financial instability.

In light of these risks, the IMF recommended that Thailand continue to normalize its macroeconomic policies, focusing on rebuilding fiscal buffers and ensuring financial stability. The IMF also recommended that Thailand implement decisive and comprehensive reforms to boost productivity and support sustained and inclusive growth.

Key Points from the IMF Report

  • Thailand’s economy is expected to grow by 2.7% in 2023, slightly higher than in 2022.
  • Inflation is expected to remain well-within the authorities’ target range of 0.5-2.5%.
  • The recovery is expected to be driven by robust private consumption, supported by the tourism recovery and government stimulus measures.
  • Investment and exports are likely to be constrained by the slowdown in external demand.
  • Continued normalization of macroeconomic policies is needed to rebuild fiscal buffers and ensure financial stability.
  • A gradual, growth-friendly fiscal consolidation supported by enhanced revenue mobilization is recommended.
  • Targeted support to vulnerable groups is needed to mitigate the impact of high inflation.
  • Strengthening the financial safety net and enhancing the coverage of the macroprudential framework are crucial.
  • New measures to address high household debt are needed.
  • Comprehensive structural reforms are essential to harness the benefits of the digital and green transformations.

“The successful formation of the new government is an opportunity to implement these reforms,” said Ms. Deléchat. “By taking advantage of this window of opportunity, Thailand can lay the groundwork for a more resilient and prosperous economy.”

The IMF’s assessment is in line with other recent forecasts for Thailand’s economy. The World Bank, for example, has forecast that Thailand’s economy will grow by 2.7 percent in 2023 and 3.6 percent in 2024.