Thailand’s economy surpassed expectations in the first quarter, driven by a rebound in tourism, but its future outlook depends on maintaining political stability. The National Economic and Social Development Council (NESDC) reported a year-on-year GDP growth of 2.7% in the three months to March, exceeding economists’ median forecast of 2.3% expansion. Quarter-on-quarter, GDP grew by 1.9%.
The first-quarter performance was bolstered by the return of tourists after the pandemic. However, the country’s political landscape following the recent general election will play a crucial role in determining the economy’s trajectory. Pro-democracy parties dominated the vote, but the formation of a government remains uncertain. The presence of 250 senators appointed by the military, who hold voting power in selecting the prime minister alongside elected Lower House members, will determine Thailand’s political stability and influence investor confidence.
Pakorn Peetathawatchai, President of the Stock Exchange of Thailand, expressed optimism that a clearer political and economic picture would make the market more attractive. He emphasized that once industries show signs of recovery, foreign funds are likely to view Thailand as a stable investment environment. The baht strengthened in response to opposition parties’ success in the election, suggesting increased market confidence.
The NESDC maintained its GDP growth forecast for 2023 at 2.7% to 3.7%. The projection for foreign tourist arrivals in 2023 remained at 28 million, with tourism typically contributing 11% to 12% of GDP. Chinese tourists, who previously accounted for about 30% of visitors, are expected to return, reaching one million per month from October onward. Thailand exceeded its tourism target in 2022 with 11.15 million foreign visitors, but it still falls short of the pre-pandemic record of nearly 40 million tourists in 2019.
Despite the positive economic indicators, the stability of Thailand’s political landscape remains crucial for sustaining growth and attracting foreign investment.
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