OECD expects Thailand to grow 3.6% next year, riding on tourism rebound
Thailand’s gross domestic product (GDP) is expected to grow by 3.6% next year, as private consumption remains strong and the labour market is recovering, according to the Organisation for Economic Cooperation and Development (OECD).
In its Economic Survey of Thailand 2023, released on Thursday, the OECD said that weaker global demand had weighed on Thailand’s exports, but this was set to change amid rising tourist arrivals into the country.
As tourist arrivals rebounded, the economy has been picking up rapidly since mid-2022. … Robust exports would benefit from rising tourism revenues in the context of China’s ongoing reopening since March 2023, the report said.
The OECD also lauded Thailand’s prompt policy response to the Covid-19 pandemic as the key to helping the country cushion its economic impacts.
“Thailand has achieved remarkable economic progress over the past decades, followed by several years of moderate growth prior to the pandemic. A strong and timely policy response helped to cushion the negative economic and social impact of the pandemic and of rising energy and food prices.”
However, the OECD suggested that Thailand needed bold reforms to make the recovery “more solid and inclusive”.
“The country now needs to address a number of key structural challenges, including the ageing population, the digital transition, possible reconfiguration of global value chains and the green transition,” the annual OECD report said.
It said that for Thailand, stronger productivity growth would hinge on structural reforms. “Boosting productivity and mastering the transition towards more sustainable and inclusive growth would require stepping up delayed structural reforms,” the OECD said in its report.
It pointed to the need for further policy action to raise productivity, stronger efforts to improve the business climate, adopt digital technologies, and foster competition, as well as relaxing remaining restrictions to market entry and foreign direct investment while expanding trade agreements to benefit from changing patterns of global trade.
The OECD also said that Thailand's most immediate short-term challenge was the phase-out of special policy support measures introduced during the pandemic amidst high inflation.
“Fiscal and monetary policies should work hand in hand to rebuild fiscal buffers while closely monitoring remaining inflationary pressures,” it said.
It also warned that Thailand’s downside risks stemmed from its high dependence on trade and investment flows amid increasing global uncertainties. Also, as a large importer of oil, Thailand remained vulnerable to swings in global energy prices.
The OECD and Thailand’s National Economic and Social Development Council organised a panel discussion on “Key Policy Insights for a Robust Recovery Path for the Thai Economy” on Thursday. Findings of the Second OECD Economic Survey of Thailand were also disclosed during the event.
The OECD, founded in 1961, is an intergovernmental organisation with 38 member countries aimed at stimulating economic progress and world trade. Most of its members are high-income economies. Japan, South Korea, Israel, and Turkey are the only Asian countries in the OECD.