The finance ministry sees the recovery being supported by local spending and an expected rebound in tourism. - Bloomberg
BANGKOK (Bloomberg): Thailand’s finance ministry expects economic growth this year to be slower than previously estimated as the nation faces the impact of accelerating inflation and Russia’s war in Ukraine.
It now sees gross domestic product expanding 3.5% in 2022, trimmed from 4% predicted in January, according to Pornchai Thiraveja, director general of the ministry’s fiscal policy office. It also raised the headline inflation forecast for the year to 5% from 1.9% seen previously.
The finance ministry is among three official economic forecasters in Thailand, with the National Economic and Social Development Council being the most closely watched. The NESDC may revise its 2022 outlook for 3.5%-4.5% growth next month.
The slowing recovery means Thailand’s economy will be a drag on the Asean-5 region’s growth, which the International Monetary Fund pegged at 5.3% this year.
The finance ministry sees the recovery being supported by local spending and an expected rebound in tourism, with the outlook facing risks from the war and its impact on energy prices. It also listed Covid-19 outbreak, global economic and financial volatility, supply disruptions and a fragile labor market as things to watch for.
The authorities are following the economic situation closely, and stand ready to take policy action as needed to support the recovery, Pornchai said.
The ministry’s downgrade on Wednesday (April 27) follows the Bank of Thailand last month cutting its estimate for the economy’s expansion to 3.2%, from 3.4%. That challenging outlook has prompted the central bank to keep borrowing costs at a record low, despite inflation hovering well above its 1%-3% target band. Thailand, a net energy importer, is facing rising costs from higher oil prices, which surged following Russia’s invasion of Ukraine.
