Thailand’s 2023 financial growth predictions revised down due to GDP data

Economic analysts have recently revised their predictions for Thailand’s 2023 financial growth, due to disappointing third quarter GDP expansion data and uncertainties surrounding the contentious digital wallet policy. For the initial nine months of 2023, the economy grew by 1.9%.

Maybank Securities, based in Malaysia, has reduced its 2023 Thai growth prediction from 2.9% to 2.3%. This decision was influenced by a disappointing performance and a delay in government infrastructure spending.

Meanwhile, BMI, a Fitch Solutions Company, has adjusted its growth outlook for Thailand in 2023 from 2.8% to 2.5%.

“Having clearly overestimated the health of Thailand’s economy in the current year, we are revising our 2023 forecast downwards,” stated the London-based research firm yesterday. However, they predict growth will improve to 3.8% in the upcoming year.

Notwithstanding, they believe the Bank of Thailand’s projection of 4.4% and the government’s target of 5.0% for next year are too ambitious, given the economy’s underperformance, reported Bangkok Post.

Data released on Monday showed that Thailand’s real GDP growth slowed to 1.5% year-on-year in the third quarter, which was less than the predicted consensus of 2.4% and BMI’s forecast of 2.6%. This was a decrease from the second quarter’s growth of 1.8%.

BMI expressed concerns about the future.

“If we are correct in predicting global growth to slow to 2.1% in 2024, then Thailand’s exports will be significantly constrained for a while longer. Furthermore, the country’s key tourism sector still has challenges to face.”

Maybank highlighted that Thailand’s third-quarter GDP was surprisingly weak, as the manufacturing sector fell deeper into contraction. Despite private consumption growth being robust at 8.1% year-on-year, this was offset by a decline in public investment of -2.6% and modest growth in private investment of 3.1%.

Government spending related to Covid-19 saw public consumption plummet by 4.9%. The contraction in manufacturing activity deepened to -4% in the third quarter, down from -3.3% three months earlier. This was due to weakness across light industry, raw materials, and capital and tech manufacturing.

Maybank stated he is looking forward to the implementation and the timing of the digital wallet initiative but added it remains uncertain.

“Legal challenges to the government’s plan to borrow the 500 billion baht needed to fund the scheme could result in further delays and changes.”

The brokerage also noted that the recipients’ willingness to spend may reduce if it results in higher tax bills in later years. Nevertheless, Maybank has maintained its 2024 GDP growth forecast at 3.6%, excluding the digital wallet scheme.