Thailand’s economy is expected to grow by 3.9% in 2023 due to strong demand from China, Europe, and the United States, as well as a recovery in tourism, according to a World Bank report.
However, exports have contracted for the eighth consecutive month due to global demand slowing.
Key Takeaways
- Thailand’s economy is projected to accelerate in the coming years due to strong demand from China, Europe, and the United States, as well as recovery in tourism and private consumption growth.
- Risks to Thailand’s economic growth include weaker global growth, political uncertainty, an aging population, climate pressures, declining export competitiveness, and high household debt.
- Thailand needs to prioritize climate change adaptation and water management to better cope with the frequent floods and droughts it faces, which pose significant risks to lives, livelihoods, and the economy.
Tourism sector expected to continue to strengthen
The tourism sector is expected to continue to strengthen, with the number of tourist arrivals projected to reach 29 million this year and 35.5 million in 2024.
Growth momentum is projected to moderate in 2024 and 2025, with tourism and private consumption driving growth. Inflation is expected to decrease to 2% in 2023.
The Bank of Thailand predicts economic growth of 3.6% this year and 3.8% next year, with tourism as a key driver.
Structural challenges remain
However, risks remain due to global growth and political uncertainty, as well as structural challenges such as an aging population and high household debt.
The report also highlights the need for Thailand to address the risks of floods and droughts, which the country is vulnerable to. It suggests implementing a robust framework for climate adaptation, investing in water resources infrastructure, and managing land and water use.
Thailand ranks tenth globally in the INFORM Risk Index from Floods
Just below Vietnam, Burma, and Cambodia, Thailand is now ranked tenth globally in the INFORM Risk Index from Floods. Without proper climate change adaptation, the existing high costs of floods and droughts to society are expected to increase.
A big flood as destructive as the one that struck in 2011 might cost the economy more than 10% of its GDP in lost output by 2030. Water shortages are extremely dangerous for agriculture, which generates around 9% of the world’s gross domestic product (GDP), notably rice cultivation, which uses a lot of water.
Flood risks are also very high in the Greater Bangkok region, where the majority of the population lives and the majority of the GDP is produced.
