The World Bank cuts projection of Thailand’s economic growth in 2023 amid global risks of Russia’s invasion of Ukraine, ongoing inflation and higher interest rates as the factor causes to weigh not only Thailand, but the global economy down.
Growth in Thailand is projected to accelerate to 3.6 percent in 2023, according to the latest projection from the World Bank in January 2023. This reflects the delayed recovery of contact-intensive sectors like tourism and transport.
A projection of 3.6 percent growth was lower than what the World Bank had projected in June last year for a 4.3 percent growth in 2023. Economic growth for the year after has also been cut by 0.2 percentage points to 3.7 percent.
Meanwhile, countries in the same region also see their growth being cut by the World Bank as well. For 2023, Vietnam’s growth was reduced by 0.2 percentage points to 6.3 percent. 0.5 percentage points was cut from Malaysia’s growth to 4.0 percent. Cambodia sees its growth being reduced by 0.6 percentage points to 5.2 percent.
Estimated growth in the region excluding China in 2022 was 0.8 percentage point above the June forecast. This reflects upgrades for Malaysia, the Philippines, Thailand, and Vietnam, most of which benefited from a surge in private consumption and strong growth of goods exports.
The World Bank noted that the recovery from the pandemic-induced recession has been uneven across the region. Output surpassed pre-pandemic levels last year in Cambodia, the Philippines, and Thailand; in contrast, it is expected to remain below such levels this year in many of the region’s economies, including Myanmar and several Pacific Island economies.
The World Bank stated that the baseline projection is subject to multiple downside risks, including the possibility of renewed pandemic-related disruptions, more prolonged real estate sector stress in China, sharper tightening of global financial conditions, weaker global growth, and more frequent disruptive weather events linked to climate change. A prolonged war in Ukraine and intensifying geopolitical uncertainty could further reduce business and consumer confidence globally and lead to a sharper slowdown than projected in the region’s export growth.
High global inflation has prompted rapid, synchronous monetary tightening. This has contributed to worsening financial conditions, particularly for less creditworthy emerging market and developing economies (EMDEs). Global growth in 2023 is expected to be the third weakest in nearly three decades, overshadowed only by global recessions. Most country forecasts have been downgraded. The recovery from the pandemic recession is far from complete, especially in EMDEs, and the per-capita income outlook is particularly subdued for poverty-stricken countries.