CIMB Thai Bank (CIMBT) predicts exports will contract 1% next year, suffering from a global slowdown and fears of a recession in key global economies.
Advanced economies including the US and the eurozone will slow in 2023 and there are concerns about a recession, while China should remain in the doldrums as it maintains its zero-Covid policy, said the bank's chief economist Amonthep Chawla.
Higher external risk factors would dampen export growth for next year, with the bank forecasting a 1% contraction, compared with estimated growth of 7.1% in 2022, said Mr Amonthep.
The tourism sector will be the key engine supporting Thailand's economic growth, with GDP forecast to gain 3.4% in 2023, higher than the projection for 2022 of 3.2% growth.
The bank predicts foreign tourist arrivals would increase to around 20 million next year, rising from some 10 million this year.
Asian travellers are expected to be the main pillar of tourism, while Chinese visitors would begin returning in the second half of next year.
He said China's border reopening is expected to take place in the third or fourth quarter of 2023, allowing cross-border travel for Chinese nationals during this period. As a result, Chinese travellers would support Thai tourism in the second half of 2023.
In addition, Mr Amonthep said the US Federal Reserve and the European Central Bank would continue to maintain tight monetary policies next year in order to tame inflation.
The Fed is expected to further hike its policy rate to 5.25% in the second half next year.
Even though inflation rates in both the US and the eurozone have declined slightly, the rates are expected to remain elevated in 2023, he said.
Developed economies could face a recession next year, said Mr Amonthep.
"The Bank of Thailand will increase its policy rate to 2% around the middle of next year, up from 1.25% now, then keep the rate steady," he said.
For the first half of 2023, Thailand's inflation rate would be higher than the central bank's target range of 1-3%, gradually declining in the second half, said Mr Amonthep.
Moreover, CIMBT estimates the baht will depreciate to 36 to the US dollar by the end of this year.
Next year, the baht should gradually strengthen in line with Thailand's economic rebound, said the bank.
CIMBT forecasts the Thai currency to be firmer, at 34.50 baht against the greenback at the end of next year.
