The influx of tourists allowed Thailand’s gross domestic product (GDP) to expand by 4.5% year-on-year during Q3 of 2022, a 4th consecutive quarter-to-quarter growth.
The National Economic and Social Development Council (NESDC), a government think tank, said GDP expanded by 3.1% during the first 9 months of 2022.
For the entire 2022 and 2023, GDP is expected to expand by 3.2% and 3-4% respectively.
“The supportive factors for the rest of 2022 and 2023 will be tourism, the investment promotion approval and the acceleration of government spending on investment,” said Danucha Pichayanan, NESDC’s secretary-general.
“The public sector must meet its spending targets and another part of the recovery will be from domestic consumption,” he said.
The economic growth in Q3 was supported by tourism recovery, export expansion (6.7% year-on-year), and production expansion (6.3%) while accommodation and food services expanded by 53.6%.
15% of the Thai economy derives from tourism-related businesses which have seen their fortunes turn around since the reopening of the country’s borders in July 2021.
Thailand expects to welcome 12 million visitors in 2022, a far cry from the nearly 40 million seen in 2019 but a stellar performance when compared to 400,000 in 2021.
“The number of foreign tourists has risen and we received nearly 10 million so far which is beyond our target, our target was 8 million,” Arkhom Termpittayapaisith, the Minister of Finance said late last week.
“We expect the number to be around 11-12 million by the end of this year,” he added.
Meanwhile, unemployment continued to drop to 1.23% in Q3 compared to 1.37% in Q2. The value of international reserves was around 200 billion Baht and public debt was around 60% of the GDP.
Inflation was still high at 6.4% in October and 7.3% for Q3 while interest rates continued to increase and the US is expected to continue to hike their rates.
For 2023, the council expects the Thai economy to expand by 3-4% which was slightly higher than the International Monetary Fund’s prediction of 2.8%.
High global inflation, rising interest rates, the war in Ukraine and the economic slowdown in China prompted the NESDC to lower its global GDP prediction for 2023 down to 2.6% from 3.1%.
The NESDC expects exports to expand by only 1% in 2023 while inflation is expected to be around 2.5-3.5%.
The number of foreign tourists is expected to increase to 23.5 million people in 2023 compared to the expected 10.2 million in 2022.
The Baht is expected to be trading around 35.5-36.5 Baht per USD compared to the average of 35.2 Baht in 2022. The currency was trading at 36.03 Baht per greenback at 11 am.
As for oil, the NESDC said that the Dubai oil price is expected to be around US$85-95 per barrel in 2023, down from the average of $98.5 per barrel in 2022, due to the expected slowdown of economies in the US, Europe and Japan.
Apart from the expected slowdown in the global economy, high household and corporate debts are also expected to continue to weigh down on the private’s sector consumption in 2023.
The NESDC recommended for the government to:
- Help indebted households and SMEs to restructure their debts
- Lower production costs for farmers especially for farmers who were affected by floods
- Concentrate on exporting to economies that are still growing, create new markets, utilize free trade agreements and prepare for a higher number of tourists
- Ensure that there is no shortage of liquidity in the business sector and ask firms that have been approved for investment incentives between 2020 and 2022 to speed up their projects, especially projects in targeted industries
- Accelerate government spending and ensure that the disbursement rate is less than 93%