Thailand’s economic conditions likely to be held back due to global recession in 2023 says JSCCIB

Thailand’s economic conditions likely to be held back due to global recession in 2023 says JSCCIB

The expected global economic slowdown is one of the biggest concerns for Thailand’s growth in 2023, according to the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB).

“The global trade expansion has the potential to slow down along with the risk of a global recession which is becoming more visible,” said Sanan Angubolkul, the current chairman of the JSCCIB and chairman of the Thai Chamber of Commerce.

Global economic conditions are expected to see a dramatic slowdown amid rising interest rates and cost-push lead inflation that led to warnings of a major recession in most developed markets around the world.

JSCCIB pointed out that the World Trade Organization (WTO) expects the global trade expansion could slow down to 1% in 2023 compared to an expansion of 3.5% in 2022.

The WTO said in a statement in October that global demand for imports is expected to weaken from the slowdown of economic expansion in major economies such as the ones in Europe which are struggling against the ongoing energy crisis caused by Russia’s invasion of Ukraine.

The monetary policy tightening in the United States will affect their spending in areas where interest rates count such as housing and automobiles.

The US Federal Reserve already raised rates by 0.75% for each of the 3 times it has held its meeting in the past few months and another rate hike of 0.75% is expected to be announced as the FED is set to provide the results of its meeting late tonight, Thai time.

Asia’s economic powerhouse, China, has also been struggling with Covid-19 outbreaks, disruption of production and weak external demand, WTO said.

At the same time, developing countries could face debt distress as import bills for fuels, food and fertilizers rise from the impacts of the war in Ukraine, they added.

The JSCCIB said high inflation and ongoing monetary policy normalization in many countries coupled with the war’s impacts on global energy prices will continue to be the main concerns for global economic expansion next year.

They said there is a possibility that European and the US could both go into a recession within the next 12 months from now.

Domestically, rising minimum wages, rising electricity bills, higher import prices and the ongoing monetary policy normalization process including the rising policy interest rate, the rising contribution for the Financial Institutions Development Fund (FIDF) and the lifting of the loan-to-value (LTV) measures will put pressure on Thailand’s economic recovery in 2023.

These concerns by the JSCCIB came after Mathee Supapongse, deputy governor of the Bank of Thailand, said at a separate seminar that Thailand’s GDP expansion could be less than 3% in 2023 if there are less than 19 million foreign tourists next year.

The target for next year is 21 million visitors compared to nearly 40 million in 2019.

Thailand welcomed 7 million visitors during the first 10 months of 2022 with a target of 10 million by the end of the year.

If exports contract by more than 2% from the target of 1.1% expansion, the possibility of less than 3% economic growth in 2023 will be even greater.

The Thai National Shippers’ Council said yesterday that they expect Thai exports to expand by 2-5% in 2023, compared to at least 8% in 2022.

The JSCCIB urged the government to maintain the measures to support small and medium enterprises (SMEs) and low-income households that are still recovering from the Covid pandemic.

For 2022, the JSCCIB has maintained its GDP prediction for the year at 3-3.5% based on the projection that exports will expand by 7-8% this year.

They said the impacts from the flooding in many provinces over the past 2 months have been limited but the expected slowdown in the global economic expansion means that the government should reconsider the lifting of their supportive and stimulus measures.

Since global trade is expected to slow down, the representatives of the private sector also asked the government to accelerate ongoing free trade negotiations to provide more export destinations next year.