Thailand’s economic growth forecast cut to 2.4% amid weak exports

Thailand’s economic growth is forecasted to slow to 2.4% this year, a decrease from the 2.8% projection made in April, primarily due to weaker-than-expected exports and public investment in the early months of the year, the World Bank announced.

The World Bank today, July 3, highlighted that the growth of Southeast Asia’s second-largest economy will be supported by consumer spending, a measured recovery in the tourism sector, and a rebound in exports. Last year, Thailand’s economy grew by 1.9%, lagging behind its regional peers.

Foreign tourist arrivals are anticipated to climb to 36.1 million this year, significantly higher than the 28.2 million arrivals in 2023, nearing the pre-coronavirus pandemic peak. The World Bank stated that total tourist arrivals are projected to reach 41.1 million in 2025, surpassing pre-pandemic levels as more Chinese visitors return.

Economic growth for 2025 is projected at 2.8%, buoyed by stronger domestic and international demand and increased government spending. This figure, however, has been revised down from the 3% forecast made in April.

The Bank of Thailand (BoT) previously forecasted economic growth of 2.6% for this year and 3% for next year, said World Bank economist Kiatipong Ariyapruchya at an event in Bangkok.

“Given the uncertainties, the central bank should hold interest rates and wait for more clarity before implementing a policy.”

Last month, the central bank maintained its key interest rate at 2.5%. The next interest rate review is scheduled for August 21.

To bolster the economy, the government plans to introduce a 500-billion-baht (US$13.6 billion) handout scheme. This initiative is a key platform of the ruling Pheu Thai Party, proposed during the 2023 elections.

Set to launch in the fourth quarter, the scheme has faced criticism from some experts who have labelled it fiscally irresponsible due to concerns about funding and its impact on public debt. The scheme has already been delayed twice this year, reported Bangkok Post.

Deputy Finance Minister Paopoom Rojanasakul mentioned that additional measures are planned for this year, which could spur economic growth up to 3%.