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Thailand’s strong position going into the crisis is helping it absorb the shock, said Assistant Governor Chayawadee Chai-anant

[WASHINGTON] Thailand faces slower growth this year due to the Iran war and there are almost “no limits” to worst-case economic scenarios if the conflict continues, a senior central bank official told Reuters.

Assistant Governor Chayawadee Chai-anant said growth in the South-east Asian nation, among the most exposed global economies due to its high reliance on imported energy, was slowing. Tourism is declining and the cost of imports is rising because of the US-Israeli war with Iran.

“It’s going to be the downward trend for a lot of things,” Chai-anant said on the sidelines of the IMF-World Bank spring meetings in Washington.

Tourism from Gulf countries, she said, fell to close to zero in March, as attacks from Iran closed regional airports. Those numbers have yet to fully rebound, and their wealthy visitors typically account for 7 per cent of total tourism spending in Thailand.

The number of tourists from Malaysia, another large growth engine for the critical sector, was also declining as high fuel costs kept them from driving to Thailand.

The central bank revised its baseline forecasts for GDP growth to 1.3 per cent for 2026 - if the war ends in the second half of this year.

The forecast is down from December expectations of 1.9 per cent; in February, the government had raised the growth outlook to 1.5 per cent to 2.5 per cent. Inflation in this scenario is forecast to hit 3.5 per cent.

Thailand’s strong position going into the crisis, she said, was helping it absorb the shock, but the economy is under severe pressure.

“In terms of the worst-case scenarios, there’s no limits to it. It’s that bad,” she said.

Source : businesstimes