Thai economy loses steam: UTCC’s growth forecast trims to 3%

With an anticipated dip in exports and a delay in state budget preparation, the University of the Thai Chamber of Commerce (UTCC) revised its economic growth forecast for the current year to 3%, a decline from the previously estimated 3.6% in December last year.

The revised growth forecast is reflective of new government measures aimed at lowering the cost of living, which include reductions in electricity and fuel prices along with debt suspension programmes. The Thai economy is also expected to benefit from an estimated 100 billion baht boost from foreign tourist revenue.

The UTCC president, Thanavath Phonvichai, noted that the postponement in budget preparation for fiscal 2024 has directly impacted government investment. This, paired with a reduction in exports and the ongoing drought, has imposed an economic burden of 200 billion baht.

Taking these adverse factors into consideration, Thanavath estimates an economic drawback of 99 billion baht, which has cut GDP growth by 0.6 percentage points.

“From now on, we have to closely monitor the government’s measures to see whether they can restore economic confidence and investment.”

Despite the revised current-year projection, Thanavath maintains that the university’s GDP growth projection for 2024 remains at 4.5-5%, with the tourism sector being a key driving force.

Forecast revisions

He also stressed that further revisions to next year’s forecast would require more clarity on the 10,000-baht digital wallet policy, particularly regarding its funding source, and whether it would be budget-based or a mix of budget and off-budget sources. This, he noted, could have significant implications on public debt and its impact on the Thai economy, reported the Bangkok Post.

A recent survey conducted by the university that gauged public perception of the cost of living policies revealed food and essential item prices as the top concern, followed by public transportation costs and debt burdens. The country’s overall economy was also a significant worry.

However, the survey also found that recent measures such as a 2 baht per litre reduction in diesel prices and lower electricity costs were perceived as effective in alleviating the cost of living.

Survey respondents also expressed optimism that the visa waiver for Chinese and Kazakh tourists could give the economy a boost, while the digital wallet handout could make a significant economic impact, although its effects are expected to be felt in 2024, Thanavath added.

Echoing Thanavath’s sentiments, Sanan Angubolkul, Chairman of the Thai Chamber of Commerce, stated that the GDP projection for 2024 of about 5% is in line with the government’s target. He suggested that if stimulus measures like the digital wallet policy are implemented, it could potentially boost GDP by 2-3 percentage points.

Sanan further added that if export conditions improve next year and the global economy remains free of complicated factors, particularly geopolitical conflicts, achieving a growth rate of 5% is a possibility.

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