Thai finance minister Arkhom Termpittayapaisith believes the country will dodge the worst of inflation and is on course to meet its 3.8% GDP goals for 2023.
During a visit to London, Mr Termpittayapaisith visited The Banker to collect his award for Finance Minister of the Year Asia-Pacific 2023, and spoke about his plans for growing the country’s economy.
He believes inflation in the country is not the highest regionally, which reached an average of 6% by the end of 2022. By February 2023, it had declined to 3.8%, lower than the levels seen in Singapore, Indonesia and the Philippines.
The causes of inflation, says Mr Termpittayapaisith, mainly came from the supply side, such as energy and food prices. “For energy prices, the government subsidised the most vulnerable groups, as well as using fiscal tools, particularly for oil used in transport and logistics. This helped the private sector to maintain or even lower prices,” he says. “The government also subsidised electricity and water prices, and the cost of cooking gas.
“On the food side, we are shifting farmers towards using organic fertilisers. This helps to reduce costs. The government also provided subsidies for the farmers.”
The Central Bank of Thailand has implemented measures to curb inflation, increasing the rate by a total of 100 basis points since August 2022, taking it to 1.5%. The target for inflation for 2023 has been set at between 1% and 3%.
GDP growth
Thailand has also outlined plans to see 3.8% GDP growth during 2023, with the boost to the country’s tourism sector set to be a key contributor. Prior to the pandemic in 2019, tourism accounted for 11% of Thailand’s total GDP, thanks to the country’s 40 million annual visitors. During 2022, GDP reached 2.6%, thanks to a heavily reduced 11.5 million tourists. The country is forecasting an increase to 27.5 million visitors for 2023.
During the fourth quarter of 2022, GDP grew by 1.4%, which Mr Termpittayapaisith says was due to the country’s exports. He acknowledges that this is low, but points to slowdowns in the global economy. However, due to pricing, the country is gaining on foreign exchange.
Domestic consumption will also help growth. “People are getting back to work and salaries have increased, particularly minimum wage. This has enhanced purchasing power,” says Mr Termpittayapaisith.
Infrastructure projects which had been postponed during the pandemic have also resumed, with public transport projects, including high-speed rail links to Thailand’s neighbouring countries, and between Bangkok and regional airports, in development.
