NESDC cuts 2023 Thai GDP to 2.5-3%
The National Economic and Social Development Council (NESDC) has revised downwards Thailand's gross domestic product (GDP) for this year to between 2.5% and 3%, following a second-quarter expansion of just 1.8%.
The decrease in growth is attributed to a 5.6% decline in exports in the last quarter, following a 4.5% decline in the previous three months. Export volume decreased by 5.8%, compared to a 6.4% decline in the January-March quarter.
The agricultural price index, meanwhile, decreased by 5.4% in the second quarter, similar to the continuous decline of the industrial production index of 4.1%.
NESDC has therefore adjusted the GDP forecast for Thailand this year from the previous estimate of 2.7% - 3.7% to the lower range of 2.5% - 3%. This adjustment is influenced by private consumption, which is expected to expand by 5%, while public spending is anticipated to decrease by 3.1% due to delayed budget disbursement. The NESDC expects the fiscal budget for 2024 to be applicable in the second quarter of 2024.
Investment as a whole is projected to expand by 1.6%, with public sector investment expanding by 2% and exports expected to contract by 1.8% due to a continuous decline in global trade volumes. The tourism sector is expected to gradually recover, with an estimated influx of 28 million tourists, although the revenue from tourism might fall short of the target, decreasing from 1.27 trillion baht to 1.03 trillion baht.
“The combined effects of investment disbursement and exports have led to a revision in the GDP projection, which will have implications for the preparation of the fiscal budget, particularly the state investment portion, which aims to stimulate the economy in the fourth quarter," Danucha Pichayanan, Secretary-General of the NESDC, noted.
It is therefore recommended that the management of macroeconomic policies for the remainder of this year prioritise various issues. These include:
-Maintain economic and political stability within the country, including safeguarding economic stability and monitoring and mitigating the impacts of changes in financial and global economic markets.
-Sustain economic expansion through spending and public sector investment, addressing issues such as delayed budget disbursement, accelerating the budget disbursement process, preparing projects for swift implementation, and monitoring expenditure effectiveness.
-Support the recovery of tourism and related services by promoting tourism activities, establishing long-term resident visa (LTR) measures, boosting domestic tourism, particularly in potential secondary cities, and enhancing high-quality tourism development.
-Care for agricultural production and farmers' income by managing the impact of climate variability, ensuring sufficient water resources for production, increasing farmers' income through better marketing of agricultural products, implementing risk reduction measures for climate-related risks, and addressing raw material cost problems in agriculture.
-Drive export growth to avoid limiting economic expansion by facilitating convenience and cost reduction in export-related activities, boosting exports to markets with positive economic growth trends, and creating new markets with strong purchasing power.
-Enhance investment in the private sector by encouraging approved investors to actualize their investments from the 2020-2022 period, addressing obstacles that hinder investment and business operations, including labour shortages in the manufacturing sector, and developing a capable workforce to support targeted industries.
-Promote investment, particularly in the private sector, by driving real investments, rectifying issues perceived as obstacles to investment and business operations, driving investment in target industries and services, promoting investments in the Eastern Economic Corridor (EEC) and driving economic special zones in each region, as well as advancing economic infrastructure and transportation networks in line with the specified plans.
