Thailand’s economy to see 2.5% growth in 2024, EIC forecasts

Thailand is projected to experience a soft economic landing next year, according to the Siam Commercial Bank’s Economic Intelligence Centre (SCB EIC). The research centre has maintained its 2024 economic growth forecast for Thailand at 2.5% but has downgraded its 2025 outlook to 2.6%, down from previous forecasts of 2.9 to 3%.

EIC chief economist Somprawin Manprasert explained that the downward revision reflects a waning momentum in Thailand’s economic expansion, influenced by both structural and cyclical factors over the medium to long term.

The government’s stimulus measures, including cash handouts to vulnerable groups this year, are expected to lift GDP by 0.5 to 0.7 percentage points, according to the centre.

Continuing these handout measures into next year could potentially support the country’s economic growth by up to three percentage points, EIC noted.

Although the government plans to implement stimulus packages, the economy is already headed towards a soft landing, said Somprawin.

The EIC will monitor the new government’s economic policies and assess the next stage of economic development.

Economic growth

Somprawin emphasised that Thailand’s economy could face a hard landing depending on three critical factors: a global economic recession, domestic political instability affecting fiscal budget disbursement, and tightening in the country’s financial system. In the worst-case scenario, EIC anticipates GDP growth of 1.9% in 2025, although the likelihood of this scenario is less than 50%.

Somprawin pointed out that Thailand‘s high household debt remains a significant challenge, exerting pressure on economic growth in the longer term. This structural issue impacts domestic consumption, the manufacturing sector, and foreign direct investment, as overseas investors tend to prioritise domestic consumption when investing abroad.

He noted that many of the new government’s immediate economic policies reflect a continuation of the previous administration’s strategies, albeit with a greater focus on supporting vulnerable households and businesses.

EIC anticipates that short-term stimulus measures will benefit sectors related to consumption, tourism, and agriculture. However, industries heavily reliant on low-wage workers may face increased cost pressures, and the energy sector could see a decline in revenue, according to the centre.

Conversely, policies aimed at improving competitiveness are expected to favour businesses related to infrastructure, industries aligned with global trends, and emerging sectors. Environmental policies will present both challenges and opportunities, necessitating adaptation by many businesses.

Structural challenges persist, particularly within the automotive industry, which could potentially lose around 40% of its domestic production capacity if manufacturers fail to adapt to shifting market preferences, according to the research house, reported Bangkok Post.

The competitiveness of local small and medium-sized enterprises also remains a concern.