Thailand’s economy is expected to show continued growth in 2023, following a strong showing in 2022. The country’s GDP saw an acceleration in growth in the first quarter of 2022, with support from the recovery of tourist numbers as Covid-19 restrictions were eased. In April and May, the manufacturing PMI remained in positive territory, and the Central Bank reported improved economic activity due to receding pandemic concerns and further easing of restrictions.
However, the current account faced the widest deficit in nine years in April, caused by a slowdown in export growth likely due to China’s lockdowns. Despite this, the government has taken an expansionary fiscal stance, as seen in the USD 93 billion draft budget for 2023, which includes a USD 20 billion deficit and is aimed at supporting the post-Covid-19 economic recovery.
The economy is expected to grow at a faster pace this year, as further easing of Covid-19 restrictions and the reopening of borders boost the crucial tourism industry and consumer spending. Consumer spending will also benefit from accumulated savings and the supportive fiscal stance. While high commodity prices and China’s Covid-19 policy pose risks to the outlook, the FocusEconomics panel predicts the economy to expand 3.5% in 2022, before growing 4.3% in 2023.
The official GDP figures for 2022 are expected to be released next month. In 2021, Thailand’s GDP grew by 1.5%, among the lowest rates in the region. The country’s economic recovery has lagged behind that of other Southeast Asian nations, but the crucial tourism sector is showing signs of a rebound, with an expected 27.5 million foreign arrivals in 2023, up from the earlier projection of 21.5 million. The government is aiming for at least 5 million Chinese visitors this year, roughly half of the pre-pandemic figure in 2019. Exports, another important driver of growth, are expected to increase just 0.4% this year, rather than the projected 2.5% due to a global slowdown. A stronger baht is also affecting exports.
In terms of inflation, the average headline inflation rate is expected to be 2.8% this year, down from the 24-year high of 6.08% seen in 2021. This figure is below the central bank’s target range of 1% to 3%.