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From 2.5% revised growth in 2022 to 1.9% growth in 2023 – Thailand’s economic growth is slowing. The decline is mainly attributed to weak exports, as indicated by official statistics unveiled on Monday.
Weak global demand is significantly affecting Southeast Asia’s export-oriented economies. Thailand, Malaysia, Singapore, and Vietnam showed slower growth last year due to the global slowdown and China’s slump. Thailand’s exports fell 1.0% in 2023 from a year earlier.
The National Economic and Social Development Council (NESDC) downgraded its 2024 growth forecast to 2.2% to 3.2% from the previous projection of 2.7% to 3.7%.
However, the Governor of the Bank of Thailand (BOT), Sethaput Suthiwartnarueput, said the Thai economy is not in a “crisis.”
“The recovery is weak, but it’s there, and it’s continuing,” said Sethaput in an exclusive interview with Nikkei Asia, refuting the assessment of Thai Prime Minister Srettha Thavisin, who said the economy is in a crisis.
Exports already showed a recovery in the final quarter of last year, supporting the governor’s stance. However, lower tourism spending is a cause of concern, and Sethaput expressed doubts that Thailand could attain pre-pandemic foreign arrivals again.
Prime minister urges rate cut amid low headline inflation
Additionally, the governor said lower rates would not help the economy recover quickly. “If we lower rates, it’s not going to make Chinese tourists spend more, or cause Chinese firms to import more petrochemicals from Thailand, or cause the government to disperse the budget more rapidly, and those are the three main factors that underlie the slow growth,” Sethaput opined in the Nikkei interview.
Headline inflation has been negative for four months, declining to -1.11% in January from the previous month.
Prime Minister Srettha has urged the central bank several times to cut rates, a move the BOT governor says is “premature” and “posing a risk to financial stability”.
The Bank of Thailand anticipates that inflation will shift to positive territory in the first quarter of 2024, forecasting full-year inflation of 2% in 2024.
