Thai economy to shake off risks in 2025 but growth limited

The National Economic and Social Development Council (NESDC) expects the Thai economy to sustain its upward momentum in 2025 despite growing risks, from a projected 2.6% growth rate this year, up from 1.9% in 2023.

According to Danucha Pichayanan, secretary-general of the NESDC, the Thai economy is projected to grow between 2.3% and 3.3% in 2025, with a midpoint estimate of 2.8%.

Key drivers of growth include increased government consumption and investment, robust domestic private demand, continued recovery in the tourism sector, and sustained expansion in exports.

Mr Danucha said key macroeconomic policy management priorities for next year include driving continuous growth in the export sector and preparing to address potential trade barriers resulting from the policies of the new US president.

Additionally, investment must be accelerated by ensuring disbursements meet their targets, he said.

"Government investment will play a crucial role in mitigating the impacts of trade barriers expected next year. There is also a need to expedite investment disbursements and develop additional investment plans to stimulate Thailand’s production sector, particularly construction and industrial manufacturing," said Mr Danucha.

He also noted that household debt in 2025 is expected to remain at a high level, requiring close monitoring of the effectiveness of forthcoming debt relief measures.

"Household debt next year will likely remain high. Once household debt accumulates, it is difficult to reduce. We will need to observe how effective the new debt-relief measures will be," Mr Danucha said.

Limited growth prospects

For next year, the NESDC expects private consumption and investment to increase by 3% and 2.8%, respectively. The export value of goods in US dollar terms is expected to grow by 2.6%, while headline inflation is estimated to be in a range of 0.3-1.3% and the current account is projected to record a surplus of 2.6% of GDP.

For this year, the Thai economy is projected to grow by 2.6%, up from 1.9% in the previous year. Headline inflation is forecast at 0.5%, while the current account is expected to record a surplus of 2.5% of GDP.

The government’s planning unit reported on Monday that the Thai economy expanded in the third quarter of 2024 by 3% year-on-year, accelerating from 2.2% in the previous quarter. After being seasonally adjusted, the economy increased by 1.2% from the second quarter. In the first nine months of 2024, the Thai economy grew by 2.3%.

Nattaporn Triratanasirikul, deputy managing director of Kasikorn Research Center (K-Research), said actual third-quarter GDP is slightly higher than the think-tank's projection of 2.6%, thanks to solid domestic consumption and a surge in government spending.

“The surprise is that private investment has remained below expectations, in contrast to a sharp increase in investment applications endorsed by the Board of Investment. We previously anticipated private investments increasing in line with soaring budget disbursement,” she told the Bangkok Post.

K-Research now expects GDP to expand by more than 3% in the final quarter, pushing up the entire year to grow by 2.6%, as it estimated.

“We don’t see any risk of 2024 GDP falling below our estimates unless something bad happens that hurts the tourism industry severely in December. But the probability is very low,” Ms Nattaporn said.

Meanwhile, K-Research does not expect a new stimulus to be announced on Tuesday by the economic stimulus policy committee, which would help boost the economy for the rest of 2024, given the limited budget available.

“For example, we don’t expect any significant boost from the second phase of the 10,000-baht cash handout with an estimated cost of 150 billion baht. The impacts would be limited this year, though it could have spillover effects next year,” Ms Nattaporn said.

The think tank now expects GDP growth in 2025 to be in line with this year.

“We project that the economy will expand below 3% next year because the policies of US president-elect Donald Trump do not benefit Thailand and other countries in Asia-Pacific,” Ms Nattaporn noted.

Pichai Lertsupongkit, chief commercial officer at InnovestX Securities, said the economy in the third quarter grew in line with stock analysts’ estimates of 2.7%.

“Now we are looking forward to hearing about economic stimulus measures to be announced today. Perhaps the scale of the stimulus will be a positive surprise for the stock market,” he said.