Thailand lowers growth forecast

Thailand’s economic growth forecast dips to 2.2-2.7 per cent this year due to slow export recovery, down from a previous forecast of 2.8-3.3 per cent, Reuters reported on Wednesday, citing a leading business group.

The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB), representing key sectors, projects exports to increase by only 0.5 per cent to 1.5 per cent, significantly lower than the earlier two per cent to three per cent estimate.

This slowdown is further confirmed by a 0.2 per cent year-on-year decline in exports during the first quarter of 2024.

Thailand’s economy grew by a modest 1.9 per cent in 2023. This falls short of the regional average and reflects challenges like high household debt, increased borrowing costs, and the slowdown in neighboring China.

The government had previously revised its 2024 growth forecast to 2.4 per cent, but left room for a potential rebound to 3.3 per cent if a planned 500 billion-baht ($13.5 billion) stimulus package is implemented later this year.

Tourism, another crucial driver of growth, is expected to remain firm with 35 million foreign arrivals anticipated. While this aligns with earlier forecasts, the government remains ambitious with its target of a record-breaking 40 million visitors.

Early data shows some promise, with Thailand welcoming 12.6 million visitors by May 5th, 2024, a 39 per cent increase year-on-year. Notably, Chinese tourists contributed significantly with around 2.5 million arrivals.

However, the business group expressed concerns regarding a proposed minimum wage hike. They believe it could negatively impact the economy and investment, and plan to petition the labour ministry for reconsideration.

Prime Minister Srettha Thavisin, however, defends the nationwide minimum wage of 400 baht ($10.8) as vital for stimulating growth, despite anxieties from business groups about rising labour costs.

(1 United Stated dollar = 37.00 Thai baht)