Thailand’s Economy Takes a Hit in 2023; Bank of Thailand Forecasts Faster Growth in 2024

The Bank of Thailand held its April 10 monetary policy meeting and announced that Thailand’s economy is expected to grow at a faster rate in 2024 compared to 2023, supported by private consumption and tourism. Despite this positive outlook, uncertainties remain regarding factors such as export recovery, government budget disbursement, and fiscal stimulus measures.

During the meeting, the monetary policy committee voted 5-2 to keep the one-day repurchase rate steady at 2.50%, the highest in over a decade, for the third consecutive meeting. Two members of the committee advocated for a quarter-point cut. The next rate review is scheduled for June 12.

The committee members believe that the current policy rate is appropriate for sustaining growth and fostering macro-financial stability in the long term. However, they acknowledge that uncertainties persist in the Thai economy, highlighting the importance of factors like export recovery and government spending.

The Bank of Thailand adjusted its 2024 economic growth forecast to 2.6% from the previous projection of 2.5%-3.0%. In contrast, the government anticipates a 4% growth rate for this year. Prime Minister and Finance Minister Srettha Thavisin has expressed disagreement with the central bank’s monetary policy, advocating for rate cuts to alleviate high household debt and the impact of China’s economic slowdown.

In addition to this disagreement, there was also an unexpected contraction in Thailand’s economy during the final quarter of 2023 when it contracted by 0.6%, with full-year growth reaching only 1.9%, below the expected growth recorded in 2023