Thailand: Economists urge caution for gloomy 2023
Thailand needs to prepare for global economic difficulties as they will intensify next year, according to economists.
Kobsak Pootrakool, senior executive vice-president of Bangkok Bank, said the world economy is entering a recession, which will definitely affect Thailand.
One current sign of the impact is Thailand’s exports have begun to decline, said Mr Kobsak.
Domestic consumption has also become stagnant, with tourism the only hope to stimulate economic growth, he said.
In 2023, tourism will play a key role in supporting the economy, Mr Kobsak said at a seminar on Thailand’s economic outlook next year hosted yesterday by Krungthep Turakit newspaper.
He said Thailand needs to ensure adequate foreign reserves as he expects the country to use a considerable amount in the middle of next year.
Supavud Saicheua, an advisor to Kiatnakin Phatra Financial Group, said it is highly likely the world will enter a recession if the US Federal Reserve keeps raising its policy rate.
Mr Supavud said he disagrees with the Bank of Thailand, which views Thailand’s inflation as being driven by the supply side.
He said in terms of the country’s current account deficit, Thailand imported more than it exported since 2021, leading to overconsumption.
Although there has been capital inflow in recent years, the inflow has gone mainly to the equity market rather than for investment, said Mr Supavud.
If Thailand records a high current account deficit in the second quarter next year and foreign tourist arrivals are insufficient, coupled with the Fed’s continued rate hikes, all these factors could affect the economy, he said.
Mr Supavud said the tourism sector would play a major role in supporting the economy next year. However, he said the current number of monthly foreign tourist arrivals of around 1 million is too low.
The country needs around 1.5-2 million foreign arrivals per month, said Mr Supavud.
Kiatipong Ariyapruchya, the World Bank’s senior economist for Thailand, said if the US economy declines by 1%, it will depress the Thai economy by 0.6%.
The World Bank still forecasts a global recession will not occur because the US has ample fiscal room, said Mr Kiatipong.
He said Thailand’s inflation is from the supply side and the nation is expected to be able to handle it.
Mr Kiatipong said he expects next year Thai inflation will fall into the country’s target range.
Earlier the Bank of Thailand reported headline inflation rose to 7.86% in August, up slightly from the previous month, mainly because of fresh food inflation, which was driven by higher vegetable and fruit prices.
In addition, core inflation increased to 3.15% in August, stemming from both food and non-food items.
Energy inflation slowed in tandem with global crude oil prices.