The Thai economy in the first quarter of 2023

Chatrudee Theparat

Macroeconomics

The Thai economy in the first quarter of 2023 expanded by 2.7 %(%YoY), accelerating from 1.4 % in the previous quarter.

After seasonally adjusted, the economy increased by 1.9 % from the fourth quarter of 2022 (%QoQ sa).

Secretary general to the National Economic and Social Development Council (NESDC), Danucha Pichayanan said this was mainly attributable to continued expansion of the service sector relating to tourism industry, coupled with agricultural production. Private consumption expenditure and exports of services still expanded.

In term of production, service and agricultural sector accelerated, while industrial sector contracted. The service sector expanded by 5.2%, spurred from a 4.3% increase in Q4/2022, due to recovery of tourism activities.

In term of expenditure, private final consumption expenditure, gross fixed capital formation, and exports of goods and services increased by 5.4%, 3.1% and 3%.

The agency maintained the Thai economy in 2023 to expand in the range of 2.7 – 3.7 %. Key supporting factors including the recovery of tourism sector, the continual expansion of private consumption, and the expansion in both private and public investments.

Private consumption expenditure is expected to increase by 3.7 %. Private and public investments are projected to increase by 1.9 % and 2.7 %, respectively. Meanwhile, export value of goods in US dollar terms is anticipated to decline by 1.6 %.

Headline inflation is estimated to be in the range of 2.5 – 3.5 % and the current account is projected to record a surplus of 1.4 percent of GDP.

The economic management for the remaining of year 2023 needs to prioritize on following issues of boosting exports to major markets with strong economic recovery coupled with expanding to new potential markets.

Stimulating private investment, by speeding up projects already approved and obtained investment promotion certificates in 2020 - 2022 to start their actual investments.

“Catalyzing the recovery in tourism and related service sector, by solving difficulties and preparing the tourism sector to be ready for the resuming of foreign tourists, promoting the development of high-quality tourism, supporting the tourism promotion events and other related activities; and promoting domestic tourism.”

Supporting agricultural production and farmers’ income, with policies be ready to support agricultural products during the cultivation season 2023/24, together with preparing policies for cushioning the impact from the El Nino, and the problem from the rising agricultural material cost.

The agency also suggested to maintain the economic and political conditions after the general election.

Mr Danucha said the new government can amend the draft of the fiscal budget 2024 to conform the policy.

“However, the new government should concern over the attempt to conduct balance budget in the future because longer time of a conducting deficit budget may affect to Thailand’s rating in long term and economic stability. It’s an appropriate time to back on track of the monetary and fiscal framework.”