Thailand’s economy grows faster than expected in Q1 due to tourism rebound

Data released today reveals that Thailand’s economy expanded faster than anticipated in the first quarter, with the return of private consumption and tourism helping to counterbalance slowing exports. As the country grapples with the effects of COVID-19, its recovery has been slower compared to regional neighbours. However, the resurgence of tourism – particularly the recent influx of Chinese visitors – has helped to support employment and domestic demand, with the sector expected to offset potential losses from declining exports.

As the nation anticipates the formation of a new government following its surprise election result yesterday, Thailand’s state planning agency maintains its economic growth outlook for 2023. According to the National Economic and Social Development Council (NESDC), the Southeast Asian economy experienced 2.7% growth from January to March, while on a quarterly basis, GDP for the March quarter rose by a seasonally adjusted 1.9%, exceeding initial predictions.

In comparison, the fourth quarter of 2022 saw a 1.1% contraction, adjusted from an initial 1.5% decrease. Meanwhile, a Reuters poll revealed that economists expected Thailand’s GDP to expand 2.3% year-on-year for January to March, following the previous 1.4% increase.

The NESDC has not altered its 2023 GDP growth forecast, which remains between 2.7% and 3.7%. The previous year’s growth was 2.6%. Furthermore, the agency’s foreign tourist arrivals forecast also stays at 28 million for 2023. Tourism generally makes up 11% to 12% of the nation’s GDP.

Thailand exceeded its tourism target for 2022, welcoming 11.15 million foreign visitors. Pre-pandemic numbers from 2019 show a record-breaking 40 million tourists visiting the country, generating US$56 billion in revenue. In terms of goods exports, the NESDC maintains its forecast of a 1.6% decline in 2023, while headline inflation is predicted to fall between 2.5% and 3.5%, Channel News Asia.