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13 Jan 2023

Thai Economy

Thailand’s 2023 GDP growth projected at 3.7% due to China’s reopening (Business Brief No.3986)


        KResearch has upwardly revised our growth forecast for the Thai economy in 2023 to 3.7 percent, against the 3.2 percent projected before, thanks to the positive effects of China’s early reopening towards Thai tourism and exports. In 2023, we expect that the number of Chinese tourist arrivals in Thailand will reach approximately 4.65 million, helping bolster the number of international tourist arrivals to 25.5 million, or within a range of 24-26 million. Meanwhile, the overall Thai exports may shrink at only 0.5 percent as Thai shipments to China, particularly consumer products, are projected to record substantial growth despite the sluggish global economy. Such products are mainly food, including fresh and canned fruit, rice, chicken, shrimp and sugar, plus products required by the Chinese industrial and manufacturing sectors as China has relaxed its zero-COVID policy although these exports to China may grow at a slower rate than plastic pallets, chemicals, cassava products, rubber products and electronics because some manufacturing facilities have relocated from China in recent years. Additionally, China’s production sector and exports may not perform well in 2023.   
       Regarding inflation, China’s decision to relax COVID-19 measures and reopen the country earlier than expected will likely support the overall commodity prices to stay at elevated levels for an extensive period of time despite pressure from the slowing global economy, especially the US and Eurozone. However, China’s reopening may not cause commodity prices in 2023 to accelerate as fast as in 2022 when they were chiefly driven by the Russia-Ukraine war. In a base case, we at KResearch expect that the Dubai crude oil price may average approximately USD90/barrel in 2023, a decline from the USD97/barrel reported for 2022. Inflation in Thailand will likely stand at about 3.2 percent in 2023 as producers are expected to transfer their costs to consumers in line with higher electricity and labor expenses. Domestic retail oil prices may not decline as fast as expected because of the relatively high Oil Fuel Fund deficit.

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Thai Economy