Thailand’s growth slowed to an estimated 2.5 percent in 2019 from 4.1 percent in 2018, due to external and domestic factors.
The economy is projected to pick up moderately to 2.7 percent in 2020 as private consumption recovers and investment picks up due to the implementation of large public infrastructure projects.
As Thailand seeks to transition to high-income status by 2037, boosting productivity and reviving private investment will be critical, according to the World Bank’s Thailand Economic Monitor report, released today.
Global economic growth is forecast to edge up to 2.5 percent in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist.
Risks include a re-escalation of trade tensions and trade policy uncertainty
These risks include a re-escalation of trade tensions and trade policy uncertainty, a sharper-than-expected downturn in major economies, and financial turmoil in emerging market and developing economies.
“A continued deceleration of economic activity in large economies, China, the Euro Area, and the United States, could have adverse repercussions across the East Asia region, through weaker demand for exports and the disruptions of global value chains.”
Birgit Hansl, World Bank Country Manager for Thailand. “
Financial investment, commodity, and confidence channels could further weaken the global economy and adversely impact Thailand’s exports.”
Declining exports and growing weaknesses in domestic demand
In 2019, declining exports and growing weaknesses in domestic demand were the key drivers of the slowdown in growth in Thailand.
Agricultural commodity exports declined by 7 percent in the first three quarters of 2019, led by sharp decreases in export volumes for major products such as rice and rubber. Manufacturing exports declined by 6 percent in the same period, with electronics exports hardest hit.
Thailand’s strong currency, which has appreciated by 8.9 percent since last year, making the baht the strongest it has been in six years, has also impacted international tourism and merchandise exports.
Accommodative monetary policies and a fiscal stimulus package
The government has responded swiftly to the growth slowdown, through accommodative monetary policies and a fiscal stimulus package to boost economic growth.
Going forward, the report recommends the governments consider policies to enhance the effectiveness of the stimulus by focusing on implementing major public investment projects, improving the efficiency of public investment management, and providing social protection coverage for vulnerable families.
The recent growth slowdown has…