Thai finance ministry cuts 2023 growth outlook, sees higher 2024 pace

BANGKOK: Thailand’s finance ministry has cut its economic growth forecast for this year to 2.7% from 3.5% earlier, due to lower exports and government spending, but it expects faster growth in 2024, officials said on Friday, as the new government plans stimulus measures.

Southeast Asia’s second-largest economy has been hobbled by weak demand from China – its largest trading partner – and other export markets, while investor confidence in Thailand fell during its protracted period without a government following elections in May. The new government took office in August.

As exports are weak, the economy continues to be supported by tourism and domestic consumption, said Pornchai Thiraveja, head of the ministry’s fiscal policy office.

Despite the outlook downgrade, “the economy is still recovering,” he said.

Exports, a key driver of the Thai economy, are forecast to contract 1.8% this year, compared with a previous forecast for a 0.8% drop, but should rise 4.4% next year, the ministry said.

The ministry forecast foreign tourists at 27.7 million this year, compared with an earlier estimate of 29.5 million. It predicts 34.5 million foreign visitors in 2024 – still short of the record of nearly 40 million posted in 2019, before the pandemic struck.

In 2024, the ministry projects growth of 3.2%, but it has yet to price in the effect the new government’s flagship “digital wallet” handout scheme, Pornchai said.

“The projection does not include government measures that are under consideration,” he said. ” If there is clarity about the new measures, we’ll evaluate the forecast again”.

The government will consider scaling down its controversial handout policy, which has been heavily criticised by economists.

Under the current plan, 54.8 million Thais would be eligible for handouts in digital form worth 10,000 baht ($276) each, amounting to 548 billion baht ($15.13 billion), according to Deputy Finance Minister Julapun Amornvivat.

The ministry predicted average headline inflation at 1.5% this year and 2.2% next year.

The baht is expected to average 35.0 baht per dollar this year and 35.3 baht next year, said Wuttipong Jittungsakul, adviser to the fiscal policy office, adding the currency was on a weakening trend until early next year. – Reuters