BANGKOK – The World Bank cut Thailand’s economic growth outlook to 2.5% this year from its forecast of 3.4% in October, before improving to 3.2% next year. It also mentioned a digital wallet programme of the new government that could enhance the short-team economic activity.
According to Mr. Fabrizio Zarcone, World Bank Country Manager for Thailand, the Thai economic growth is projected to pick up to 3.2% in 2024 from 2.5% this year, supported by a recovery in tourism and goods exports and sustained private consumption.
Growth in 2023 was affected by a decline in exports as well as ongoing fiscal consolidation.
Meanwhile, decreased energy prices are predicted to slow Thailand’s inflation to 1.1% in 2024. Food prices, on the other hand, are projected to rise. Because of Thailand’s reliance on energy imports, rising geopolitical tensions and high oil prices could drive up inflation, posing a risk to the economic outlook.
However, Thailand’s economy is projected to recover in 2024 supported by tourism and goods exports recovery as well as sustained private consumption. Growth is projected to accelerate from 2.5 percent in 2022 to 3.2 percent in 2024. Tourism and private consumption will be key drivers.
Goods exports are expected to rebound due to favorable global trade despite the slowing Chinese economy. Tourism is projected to return to pre-pandemic levels in mid-2025, set back by the Chinese slowdown.
“The planned Digital Wallet is not yet included in the baseline but could potentially boost near-term growth further if implemented. If the Digital Wallet program (THB 500 billion, 2.7 percent of GDP), is rolled out in May 2024, growth is anticipated to surpass baseline projections by 0.5-1.0 percentage points over the two-year period and the fiscal deficit may increase to 4-5 percent of GDP, approaching the average level observed during the COVID-19 crisis in 2020-2022,” the bank said in its Thailand Economic Monitor.
Due to the new government’s expanded cost-of-living support measures and tax expenditures, the general government deficit is projected to widen to 3.1 percent in fiscal year 2024 and remain elevated in fiscal year 2025. Public debt is projected to peak at 62.8 percent in fiscal year 2024.
The bank also noted that carbon pricing must be considered a critical policy instrument if Thailand is to meet its ambitious carbon neutrality target.
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