Thai economy to expand at least 3% for next 2 years but election a potential disruptor: Fetco
The Thai economy will defy global recession to expand at least 3 per cent both this year and next year, the Federation of Thai Capital Market Organisations (Fetco) forecast on Monday.
Thai growth will come from a recovery in tourism and foreign direct investment after the Covid-19 pandemic, Fetco chairman Kobsak Pootrakool predicted. The World Bank forecasts Thai growth of 3.1 per cent in 2022 and 4.1 per cent in 2023.
Kobsak, who is also executive vice president of Bangkok Bank, said this year’s repeated raising of policy rate by the US Federal Reserve to combat inflation is creating a global recession that could last until next year. He said this recession, the fifth in the past 50 years, would cause mass layoffs by US and European corporations as well as liquidity problems in emerging markets, which would need International Monetary Fund assistance.
“As for Thailand, exports in 2023 will not expand sharply like in the past one or two years as most of our trade partners will still be suffering from the economic downturn,” he said. “However, rising tourism and foreign direct investment will help Thailand’s economic expansion surpass 3 per cent this year and next year.”
Kobsak pointed out that Thai tourism industry is on an upward trend with around 1.5 million foreign visitors per month since August. He estimated that total foreign arrivals this year exceed 10 million and grow to 20-25 million in 2023. These visitors would generate significant circulating capital for the Thai economy.
Kobsak added that foreign investors also favour Thailand as a top choice in Asean, along with Vietnam.
“The fact that China’s electric car manufacturer BYD is establishing a plant in Rayong proves that Thailand can still attract foreign direct investment to strengthen our economy,” he said.
Possible blocks to economic expansion include political transition after the general election due in May 2023, Kobsak said. The government transition could disrupt continuity of economic policy and investor confidence, he said.
He also urged the government to provide data on the strengths and opportunities in Thailand’s economy to maintain investor confidence through the recession. This could be done via domestic and international marketing campaigns and roadshows. “The government must also make sure that mega projects such as expressways, high-speed railways, and infrastructure in the Eastern Economic Corridor and Southern Economic Corridor progress as planned to attract foreign investment in facilities,” he said.
