UTCC lowers Thailand’s 2023 economic growth forecast to 2.5%

The University of the Thai Chamber of Commerce (UTCC) lowered its economic growth forecast for 2023 to 2.5%, a dip from the previous prediction of 3% made in October of the previous year. The UTCC also anticipates a growth rate of 3.2% for the current year.

The UTCC’s president, Thanavath Phonvichai, linked this downgrade to the third quarter’s lower-than-expected 1.9% GDP growth rate. Factors like the sluggish recovery of the Chinese tourist influx and the lack of a fiscal 2024 budget, which has reduced fiscal stimulus, have impacted consumption and state investment, thereby contributing to the slump, he indicated.

A consistent drop in stock levels, particularly in the industrial goods category, is another contributing factor. Producers’ uncertainty about demand for new products has led to production delays and the slow release of existing stock, according to Thanavath.

The UTCC predicts that Thai exports will shrink by 0.9% in 2023. It also forecasts an inflation rate of 1.3%, household debt at 89.8% of GDP, and foreign tourist arrivals at 28 million.

Private sector spending, encompassing consumption and investment, was a key factor in Thailand’s economic growth last year and continues to rise. The positive turn in exports in the fourth quarter also contributed to economic expansion, Thanavath said.

Private consumption played a crucial role in driving Thailand’s economy in 2023, further stimulated by an export rebound towards the end of the year.

Commerce Ministry data reveals that Thai exports rose for the fourth consecutive month in November, showing a year-on-year increase of 4.9% to US$23.5 billion (804 billion baht). Imports saw a 10.1% increase to $25.9 billion, leading to a trade deficit of US$2.39 billion (81 billion baht).

For the initial 11 months of 2023, exports dropped by 1.5% to US$262 billion (8.9 trillion baht), while imports decreased by 3.8% to US$268 billion (9.1 trillion baht), resulting in a trade deficit of US$6.16 billion (211 billion baht), Thanavath said.

“This year, we forecast a growth of 3.2%, but this excludes the impact of the digital wallet project. Exports are expected to grow by 3%, the general inflation rate is projected to be at 2%, household debt is estimated to decrease to 87.8% of GDP, and international tourist arrivals are expected to reach 35 million.”

A clear recovery in the tourism sector, continued expansion of private consumption, robust private sector investment, positive growth in exports, a stable inflation rate, and government stimulus measures to boost the economy are all factors that will support the economy in 2024. Stay informed about the latest business developments in Thailand.