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Monday, June 5, 2023

Bank of Thailand Expects 3.6% Economic Growth Driven by Tourism and Domestic Consumption

Thailand’s economy is still projected to grow at 3.6% this year, driven by tourism and domestic consumption, despite turbulence in the first half of the year and global financial uncertainty, according to the Bank of Thailand (BOT). The BOT governor, Sethaput Suthiwartnarueput, said that with the country’s economic recovery remaining intact, there is little need for stimulus measures, and fiscal and monetary policies should be normalized for stability as inflation risks persist. The BOT’s projected growth this year is close to the country’s long-term growth potential of about 4%.

However, Suthiwartnarueput said the BOT expects the economy to grow 2.9% from a year earlier in the first half, with exports seen down 7.1% year-on-year. The growth is projected to accelerate to 4.3% year-on-year in the second half of the year when exports should rebound 4.2%.

The BOT expects the recovery of Southeast Asia’s second-largest economy to be given a boost by a rebound in tourism. It expects 28 million foreign tourist arrivals this year, compared with nearly 40 million in pre-pandemic 2019.

Headline inflation, which cooled to 2.83% in March, is expected to be at 3.3% in the first half and 2.5% in the second half of 2023. The BOT governor said inflation risks remained and needed monitoring.

The BOT raised its benchmark rate by a quarter point to 1.75% last month to curb price pressures. Economists expect a further rate hike when the rate is next reviewed on May 31.

Suthiwartnarueput said the BOT expected to issue rules on virtual banks in the third quarter of this year, delayed from the second quarter.

Deedee Boon
Author: Deedee Boon

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