Mega projects, tourism upswing to propel Thai growth

By TIN Media | Tourism Malaysia Published 1 year ago on 2 March 2023
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MALAYSIA:

According to Finance Minister Arkhom Termpittayapaisith, a series of multibillion-dollar infrastructure projects and a surge in tourism will drive Thailand's expansion this year, protecting the economy from lower exports and any potential delay in budget approval due to elections.

Three projects with a combined investment of around 524 billion baht (RM66.7bil) have received government permission; these projects include an extension of an airport southeast of Bangkok, a deep seaport, and a high-speed rail route connecting three airports.

Additionally, he claimed that increased imports of machinery and equipment indicated that private-sector investment was improving.

Even though a subpar performance in the most recent quarter needs to be taken into account, the finance ministry is sticking to its prediction for a 3.8% increase in the gross domestic product this year, according to Arkhom.


The recovery will also stay on pace thanks to strong domestic demand and a strengthening services sector, he added.

Given that elections are tentatively scheduled for May, Thailand, which had the slowest growth rate among South-East Asia's main economies last year, now runs the possibility of a delay in parliament clearing the 3.35 trillion baht (RM428.570mil) budget for the upcoming fiscal year.

Similar to the previous election year in 2019, when growth was cut in half to 2.1% from a year earlier, any delay in forming a government and enacting a budget might cause a significant economic slowdown.

Although a lot of people claim we have the lowest rate in ASEAN, Arkhom noted in Bangkok that his country is "very comfortable" with its growth trajectory.

The Thai economy has benefited greatly from tourism, especially during the recent short-term rebound. After the Chinese reopening, we anticipate further advancement in the tourism industry.
With visits exceeding two million for a second consecutive month in January, foreign tourists are returning to Thailand in large numbers.

With China, which before the pandemic was the greatest supplier of tourists for the nation, resuming outbound group excursions earlier this month, the recovery is anticipated to accelerate.

While private consumption will be boosted by tourists, a downturn in Thailand's main trading partners is anticipated as a barrier, according to Arkhom.

According to him, the recovery will continue intact with the help of an ongoing expansionary financial strategy and a gradual return to normal interest rates.

One of the most dovish central banks in the area has been the Bank of Thailand (BoT), which has raised its benchmark rate by only 100 basis points since August.

To support the economic recovery, the monetary policy committee (MPC) of the BoT stated that a slow and deliberate normalization was required.

Arkhom stated that "you wouldn't see the MPC being aggressive in raising the rates," adding that the finance ministry and the central bank concur on the necessity for a coordinated response to guarantee the economy recovers fully.

Headline inflation may decline from a 14-year high of 7.86% in August to a range of 3% to 4% later this year as global energy and commodities prices decline and amid ongoing government subsidies on electricity, cooking gas, and diesel costs for specific groups, according to Arkhom.


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