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16 Jan 2023

Econ Digest

Thailand’s 2023 GDP growth projected to increase to 3.7% due to China’s early reopening


        KResearch has upwardly revised its growth forecast for the Thai economy in 2023 to 3.7%, against the 3.2% projected before, which is thanks to the positive effects of China’s early reopening towards Thai tourism and exports. In 2023, the number of Chinese tourist arrivals in Thailand is expected to 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 by only 0.5% compared to a 15% contraction in the previous projection in December 2022 as China's reopening will help domestic consumption and production gradually return to normal levels from the beginning of 2023 onwards.

        Products most likely to benefit from China’s reopening are mainly food products that meet consumer demand, including fresh and canned fruit, rice, chicken, shrimp and sugar, as well as products required by the Chinese industrial and manufacturing sectors such as plastic pallets, chemicals, cassava products, rubber products and electronics. There are indications that products for industrial and production use should have good prospects in the Chinese market as the easing of the epidemic control measures in China has led to the removal of restrictions on economic activity. However, export growth for this category will be lower than for consumer products as manufacturers have dispersed their production bases outside of China in recent years, and production and exports from China remain limited due to the continued weakness of the global economy. Moreover, China’s reopening has also caused energy prices this year to be slightly lower than the previous year, which will result in a decline in exports of commodities that depend on oil prices this year as compared to the previous year.

        In summary, despite the positive outlook for exports of several types of products, exports of food products with the most promising prospects account for only 20% of Thailand's total exports to China, while export growth of the other products is limited and affected by a record-high comparable base last year. As a result, Thailand’s exports to China are expected to post  single-digit growth of 3.4% this year (up from the zero-growth in the previous projection).

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Econ Digest