CIMB Thai adjusts GDP forecast for 2023 to 3.0% and 2024 to 3.5% in line with the slowdown of the Chinese economy.
Dr. Amornthep Chawala, Assistant Managing Director Executives of the Research Office of CIMB Thai Bank revealed that the Chinese economy is slowing down. Affecting exports. The Research Office has revised its forecast for the growth of the Thai economy this year. Slower than initially expected at 3.3%, with GDP expected in 2023 to be at 3.0% and in 2024 at 3.5% from the original estimate of 3.7%. The main factor driving the economy is the service sector related to tourism. and spending by middle to high income groups with strong purchasing power. Amidst waiting for economic stimulus from the government that is expected to be concrete in the 2nd quarter of 2024.
The Research Office is concerned that the Thai economy is not expanding evenly. Purchasing power at the lower end is still weak. and was further hurt by drought problems and high household debt. Only the tourism engine is still strong. But Thai tourism is still concentrated only in main tourist cities.
For the Thai economic outlook in 2024, one must keep an eye on the world economy and government policy. This will affect the components of the GDP forecast such as exports, tourism, consumption, public and private investment. By the CIMB Thai Bank Research Office, there are 3 hypotheses: good case, bad case, and worst case.
In a good case, the US can avoid a soft landing while China injects economic stimulus to drive growth. and there is no debt problem among large companies. and the real estate bubble problem
Thai exports recovered quickly in the fourth quarter, causing the full year exports to shrink less than expected at -2.1% this year and expand by more than 0.6% next year. The number of tourists grew higher than expected, or more than 28.4 million. people this year and 34 million people next year
The government's economic stimulus package could be implemented before the end of 2023, with the aim of injecting money into low-income households and stimulating consumption. In addition, there is political stability, creating confidence, attracting foreign direct investment (FDI) and increasing investor confidence.
Worst case: US economy slowed down amid a prolonged period of higher interest rates and inflation. China faces a further slowdown due to corporate defaults and a bubble in the real estate market.
Thai exports grow slightly amid weak global demand. Tourism continues to be a driver of economic growth.
The government's economic stimulus policy will begin to be implemented in the second quarter of 2024 after budget approval. Stimulate consumption and investment, and there may be some FDI that will shift investment bases to Thailand.
Worst case scenario, the US economy slowing into a technical recession in the first half of 2024, while China faces a more severe slowdown. But it will still grow above 4% in 2024.
Exports slowed amid weak global demand and supply chains, while tourism revenue grew slower than expected. The government's economic stimulus policy has been delayed to the second half of 2024, having a further impact on household consumption of low-income people. that are affected by the severe drought situation
For the direction of policy interest rates It is expected that the Bank of Thailand This round of interest rate increases may end at 2.25% to stop expectations of high inflation in the future. from the government's economic stimulus policy Especially the increase in the minimum wage. Meanwhile, the baht is expected to strengthen against the US dollar. Due to the prediction that the United States Interest rates will begin to be cut in 2024 and the baht will likely strengthen due to stronger Thai tourism revenue. The baht is expected to be at 34.50 baht per US dollar by the end of 2023 and 33.50 baht per US dollar by the end of 2024.
Risk factors that may result in low economic growth in Thailand
1. Decoupling: The US and Chinese economies are completely separated from each other due to trade war issues. technology war Affecting the supply chain and export sector of Thailand and the ASEAN region.
2. De-dollarization Reduce dependency on the US dollar Even though the US dollar is still the main currency for spending and repaying foreign debt. But there will be other currencies, especially the Yuan (yes, in the BRICS group), increasingly used in the global financial system. Even though it still cannot replace the US dollar. However, this may cause the exchange rate to fluctuate.
3. Dis-inflation: Low inflation, especially from China which faces the problem of deflation during a period of lower economic growth. Product prices tend to decrease. This will affect monetary policy in Asia, making it even more different from the United States, which still faces inflation and will maintain high interest rates.
4. Digitization: The Thai economy enters the digital age. In the future, more government measures will come in this form. It helps to verify the source of money with Blockchain technology, but SMEs and small businesses in the provinces may not be able to adapt to the technology in time to keep up with the big players and this may create more inequality. The new government should find a way to help SMEs access this new project as well.
5. Democracy Movement is a political expression in the country. There have been calls for the drafting of a new constitution to be more democratic. There may be political fragility or political conflicts that may arise again, affecting investor confidence.
Source: Thai News Agency