NESDC adjusts Thailand’s GDP growth projections

An adjustment to the anticipated GDP growth for 2023 and 2024 has been made by the National Economic and Social Development Council (NESDC), dropping to 1.9% and 2.7% respectively. The secretary-general of NESDC, Danucha Pichayanan, has called upon the Bank of Thailand to utilise financial measures to support the economy.

The NESDC unveiled the figures for the economic growth in 2023, along with its prediction for 2024’s growth, both of which were lower than the previously anticipated 2.5% and 2.7-3.7% (averaging 3.2%) respectively. Danucha Pichayanan proposed that the central bank should contemplate measures to decrease interest rates, especially the net interest margin (NIM), which currently stands high at approximately 5%, to aid in the economy’s recovery.

“In the recent past, the government undertook many stimulus measures to revive tourism, support investment, and expedite the disbursement of the state budget. As a next step, the government should use financial measures to support the economy.”

The NESDC is urging financial institutions to lower the NIM to aid small and medium-sized enterprises (SMEs) and households with their debt issues. The NIM does not, however, have a significant impact on large businesses.

Danucha further suggested that the central bank should prolong its debt assistance measures by preserving the minimum payment rate for credit card debt at 5% for some time. This measure had expired at the end of the previous year and is now at 8%, but its implementation could prevent non-performing loans (NPLs) among SMEs and households.

In 2023, public investment and public consumption saw a contraction of 4.6% in comparison to 2022, caused by a delay in the disbursement of the fiscal 2023 budget due to the general election. Exports of goods and services expanded by 2.1%, a decrease from 6.1% in 2022, reported Bangkok Post.

Predicted GDP growth for 2024, which is expected to expand between 2.2-3.2%, with an average of 2.7%, can be attributed to various positive factors. Public investment is expected to decrease by 1.8%, while public consumption is projected to increase by 1.5%. Private investment and consumption are expected to expand by 3.5% and 3%, respectively.

However, the Thai economy still faces risks in 2024 due to a delay in state budget planning, increasing household debt, drought, volatility in the global financial system, and geopolitical tensions worldwide. Moreover, China’s economic issues, primarily the liquidity crunch in its real estate sector, could potentially impact Thailand’s export sector.