The prospects for growth in 2023 will be driven primarily by foreign tourism with over 21 million tourists expected to arrive. The real problem that the kingdom faces next year is a labour shortage in the sector.
Key leaders of the Thai economy this week including Deputy Prime Minister Supattanapong Punmeechaow, the Secretary-general of the National Economic and Social Development Council (NESDC) Danucha Pichayanan and the Bank of Thailand governor Sethaput Suthiwartnarueput have come out to emphasise that it is on a growth course going into 2023 with GDP expected to rise by 3.8%. Indeed, the Bank of Thailand boss has predicted that the economic headwinds in 2023 are far more likely to buffet larger, developed economies such as the United Kingdom and Japan rather than Thailand and other, more adaptable, emerging economies.
Deputy Prime Minister Supattanapong Punmeechaow put his best foot forward at a Bangkok Post-sponsored seminar in Bangkok on Thursday themed ‘Accelerating Thailand’ as he confidently predicted that the country’s economy will buck the trend next year with a slowdown in world trade and GDP growth predicted by both the International Monetary Fund (IMF) and the World Bank.
Mr Supattanapong pointed to robust domestic consumption and plans by the government to boost infrastructural development next year with a population which is becoming increasingly computer literate, as signs of hope.
Infrastructure plans first mooted in 2015 coming on stream says Deputy PM Supattanapong Punmeechaow
In his speech, which made much of the government’s nascent policy to develop a newer green economy, he said that infrastructural projects begun in 2015 in Thailand will soon be coming to fruition.
Mr Supattanapong pointed to a 250% increase in electric vehicles powered solely by battery this year on Thai roads with 13,000 registered in the kingdom from January to September as evidence of the progress that is being made.
Supporting this development, the minister pointed to 869 charging stations now in operation within the country with over three thousand charging points
Last week, the Deputy Prime Minister unveiled a $5 billion or ฿200 billion investment in Thailand to construct data centres by US firm AWS Computing in Thailand, which will see ฿20 billion alone invested in the first year while, this week, Prime Minister Prayut Chan ocha revealed that inward investment commitments for the opening nine months of 2022, approved by the Board of Investment (BOI), came to over ฿400 billion.
Thailand must attract big firms moving out of China and Taiwan as fear of geopolitical conflict rises
The conference also heard from Danucha Pichayanan, the Secretary-general of the National Economic and Social Development Council (NESDC), the kingdom’s key economic advisory body.
Mr Danucha said that Thailand was working on improving its position regarding access to computer chip technology and the development of a manufacturing base for electronic chips as a key requirement to the emergence of its electric vehicle industry in the years ahead as a world player.
He also pointed out the need to attract foreign firms which are currently relocating to Southeast Asia to protect their supply chains from a rising possibility of geopolitical conflict, to Thailand.
Taiwanese firms are also moving off the island
This is currently something that is underway with over 25% of Taiwanese firms in mainland China having already shifted production out of the country with only 31% of the island’s firms still there stating that they had no plans, as yet, to move.
This information came in a survey earlier this month conducted by the Centre for Strategic and International Studies (CCIS) which has already highlighted that a majority of US firms, most recently Apple, have begun the process of relocating manufacturing capacity out of the communist country.
There is also a movement of Taiwanese firms from Taiwan itself fearing military conflict with 13% having already moved while 20.8% were actively considering the matter.
Healthy economic fundamentals, prudent public debt level leaves Thailand in a strong growth position
Mr Danucha also drew attention to Thailand’s falling inflation number with the rate for September coming in at 8.2% compared to 8.3% in August.
He said that it was expected that the rate by the second half of 2023 would be within the Bank of Thailand’s targeted rate of 1% to 3%.
Mr Danucha highlighted the kingdom’s strong foreign currency reserves which he quoted at $220 billion saying it was three times higher than short-term foreign debt.
Last hurrah for economic stimulus in the opening months of 2023 says Finance Minister before focusing on balanced budgets including a higher tax take
In this regard, he pointed out that only 1.8% of the kingdom’s public debt was in instruments held by foreign parties or not denominated in baht while the country’s public debt level, at 60% of GDP, was quite prudent by international standards.
The top economist pointed to growing employment with Thailand’s unemployment rate falling to 1.35% from 2% during the pandemic.
So much so, he declared, that the problem Thailand now faces is a labour shortage, particularly in the foreign tourism sector.
Tourism remains a growth engine with over 21 million visitors expected in 2023 and a labour shortage
The foreign tourism sector was now powering back to life.
Mr Danucha said that the industry accounted for 17% of Thailand’s GDP and predicted that the target for 10 million visitors this year would be achieved or surpassed.
The latest figure from the government, just released, to October 25th, shows 7.7 million visitors have already arrived with every indication that Thailand may ultimately welcome between 11 and 12 million visitors.
On Friday, the Ministry of Finance, however, trimmed back its GDP growth projections for 2022 to 3.4% from 3.5% but projected only 10.3 million foreign tourists this year.
GDP growth, this year, has been driven by a projected 8.1% rise in exports while the ministry projects a 2.5% rise in 2023, in the face of a world slowdown.
The export growth projection was ahead of a 1% growth rate quoted this week by the Bank of Thailand governor, Sethaput Suthiwartnarueput for 2023.
The kingdom is targeting 21.5 million foreign tourists in 2023 or 53.75% of what was seen in the record year of 2019 when 40 million foreigners were welcomed and generated over ฿2 trillion in income.
This should also contribute to 3.8% growth in 2023.
Bank of Thailand boss claims Thailand and emerging economies are more adaptable to headwinds
Bank of Thailand Governor Sethaput, speaking this week, at a digital conference, predicted that the kingdom was also on track to buck the trend in world economics and said that the headwinds are more likely to impact developed economies such as the United Kingdom and Japan, more than Thailand or even other emerging economies as such countries had economies that are more adaptable to external conditions.
‘If the world economy is in recession, what will affect us first is the export sector. This year, we estimate that exports will grow by 8%, while next year we see only 1% export growth. The negative impact of the global recession is quite large. Therefore, from our previous projection that this year will grow at 3.2%, next year will expand by 3.8%, if there is a slight decrease, not much. The overall direction will continue to recover. In terms of domestic factors, the slowdown in the Thai economy can only occur when something affects the recovery of tourism. Because it is the main driving force, we see that the Thai economy will recover a lot, driven by tourism and that foreign tourists in the next year are likely to enter much higher than this year.’
About the Author
Joseph Anthony is an expat from Ireland who has lived in Thailand for the last decade. He has worked extensively in the media including editorial positions in Ireland and Thailand. He is focused on economic and business stories in Thailand as well as the expat lifestyle.