Picture the world economy as an ocean liner, gracefully navigating through calm seas, but recently finding itself in somewhat choppy waters. This analogy paints the picture that Burin Adulwattana, the esteemed Managing Director and Chief Economist at the illustrious Kasikorn Research Center Co., Ltd. (or KResearch as they’re fondly referred), sketched for us. He illuminated the fact that the global economic currents are slowing, with the winds of global trade not blowing as powerfully as before. This shift is most noticeable in the manufacturing realm across our vast globe, but more so in powerhouse nations like China and Germany, where export is the name of the game.
The story spins further; it turns out China, with its monumental economic presence, is currently stumbling due to a stumbling property sector, causing domestic demand to quake in its boots. Meanwhile, across the Pacific in the United States, the Federal Reserve, helmed by astute economists and policymakers, keeps a watchful eye on the American economic horizon. Their verdict? All’s well, or at least well enough to potentially keep interest rates lofty up until the year 2024. Though, there whispers in the financial market’s corridors about a potential easing of their policy rate come the first semester of 2024.
In the Land of Smiles, Thailand, famed for its lush landscapes and infectious hospitality, KResearch has offered a more modest growth projection for the Thai economy in 2023. Originally, the forecast shimmered at a bright 3.0%, but has been dialed back to a more subdued 2.5% in light of the global economic headwinds. It’s like preparing for a fabulous party, only to realize you might need to scale back the guest list.
The pulsating heartbeat of China’s economy, which normally beckons tourists far and wide, now beats a tad slower—this, in turn, may lead to a ripple effect, with Thailand potentially welcoming fewer international voyagers than expected in 2023. It’s the tale of the anticipated 27.6 million intrepid travelers, contrasted against a backdrop where the nation’s merchandise exports are poised to retract by 1.3%, an unexpected but welcome improvement from the initial forecast of a 2.5% dip.
But it’s not just external forces at play; domestically, Thailand grapples with the fact that its tourism sector hasn’t yet hit the crescendo of full recovery. There’s also the dance of the manufacturing sector that’s still finding its rhythm in slow motion. Add to that a symphony of hefty household debt, all composing a concerto of domestic car sales plunging month after month, with core inflation stubbornly staying below the Bank of Thailand’s conductor’s baton. Amidst these economic harmonies, KResearch projects the Thai central bank has put down the baton on hiking its interest rate, letting it rest at a harmonious 2.5%.
Looking to the horizon of 2024, KResearch forecasts a refreshing upturn for Thailand’s economic fortunes, predicting a growth rate that pirouettes to 3.1%. This foresight is bolstered by public investments pirouetting with consumption, and a hopeful leap in merchandise exports by 2.0%. As though the nation is staging a magnificent festival, we could see international tourist arrivals blossoming to 30.6 million, from the projection of 27.6 million for the ongoing year. If the sequins of the government’s digital wallet initiative are sewn into the economic fabric, it could be the sparkle that lifts economic growth to 3.6%. The inflation rate is poised to maintain an elegant pose at 0.8% in 2024, with global oil prices taking a curtsy at an average of USD 72.5 per barrel.
But the narrative doesn’t end here, for amidst the fortress of global trade protectionism and the automotive industry’s electrifying waltz towards electric vehicles (EVs), Thailand could very well transform into a regional EV production hub—a leading beacon in this automotive renaissance. Coupled with the potential relocation of manufacturing bases in sectors like electronics, there’s a chance for Thailand to orchestrate new, dynamic economic melodies in the years to come.
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