Standard Chartered Bank (Thai) expects the new administration is likely to have greater stability and unity than the current government thanks to a stronger political base.
A new coalition government is projected to be formed by several major political parties, resulting in greater stability in terms of economic policies when compared with the incumbent administration comprising around 20 parties including smaller ones based on a calculation formula of party lists, said Tim Leelahaphan, an economist at Standard Chartered Bank.
The bank needs to observe the general election, the formation of the next government, and announced economic policies before analysing the country's economic outlook, said Mr Tim.
Political factors are expected to become clearer over the next 2-3 months, he said.
Despite the current uncertainty, the bank maintains a positive growth outlook for the second half of 2023, driven by expectations of consumption-supportive measures from the next administration and a clearer tourism recovery.
According to Mr Tim, a favourable political landscape and clearer tourism recovery should support a strong recovery in the second half of the year.
Standard Chartered forecasts the country's GDP to grow by 4.3% this year. The first-half outlook is 2.9% growth, increasing to 5.7% in the second half.
The bank predicts headline inflation of 2.1% compared with 2.7% projected previously, with core inflation at 1.7%, down from 3.3% previously.
The current account surplus is forecast at 3.6% of GDP compared with 4.0% in the bank's previous forecast.
He said Standard Chartered expects the new government to be fully operational and implement consumption-supportive measures.
Moreover, the bank anticipates a clearer tourism recovery with the return of tour groups from China.
The bank forecasts foreign tourist arrivals to reach 25 million in 2023, with the possibility of even higher numbers.
In addition, Standard Chartered expects the Bank of Thailand will hike its policy rate by another 0.25 percentage points at the upcoming meeting on May 31, raising the benchmark rate to 2%, which is expected to be the terminal rate for this cycle.
With the country's robust economic indicators and the central bank's positive outlook for the economy, Standard Chartered expects continued policy normalisation in an effort to build policy space, said Mr Tim.
