The Finance Ministry’s Fiscal Policy Office has decided to reduce its Thai economic growth forecast for 2023, from 3.5% to 2.7%, due to the tourism slowdown and export contraction.

Pornchai Thiraveja, director-general of office, said today (Friday) that the reduction is in line with the 2.7% growth projection by the International Monetary Fund and the 2.8% forecast from the Bank of Thailand.

Thailand’s exports for the whole year are forecast to contract by 1.8%, instead of 0.8% as originally projected, while tourist arrivals by the end of the year are expected to be about 27.7 million, instead of 29.5 million. As a result, revenues from tourism are estimated to be around 1.18 trillion baht, instead of 1.25 trillion baht, mainly due to the fewer than expected arrivals from China.

Nonetheless, the private sector’s consumption growth of about 5% and lower inflation, at about 1.5% for the whole year, mean that Thailand’s economy continues to grow, although at slower pace than earlier predicted, Pornchai said.

He said that growth next year is forecast to reach 3.2%, thanks to private sector consumption, which is forecast to increase by 3.1%, a 4.4% growth in exports, a 3.5% increase in investment by the private sector and a projection of 34.5 million tourist arrivals, or a 24.6% increase year on year.

Pornchai said that the 3.2% growth projection for next year has not taken into account any potential positive effects of the proposed “digital wallet” scheme.

He also advised that Thailand closely monitor the war between Israel and Hamas, the war in Ukraine and the confrontation between China and the United States which, he said, could have global implications for supply chains, international trade and oil prices.