Thailand’s GDP Growth Falls Short of Expectations in 2024
Thailand, the second largest economy in Southeast Asia, saw its gross domestic product (GDP) grow by 2.5% in 2024, falling below expert forecasts, the National Economic and Social Development Board (NESDC) reported on Monday.
Economic growth accelerated slightly from 2.0% in 2023, driven by increased public investment and exports. However, the kingdom continues to lag behind its regional neighbors, Vietnam, Malaysia, Indonesia, and the Philippines, which all recorded growth rates above 5%.
The performance fell short of the 2.7% forecast by economists surveyed by Bloomberg and the 2.9% estimate from analysts at MUFG Bank. Thailand’s GDP grew by 3.2% in the fourth quarter of 2024, compared to the previous year, missing the 3.8% expansion projected by Bloomberg, the NESDC said.
The agency forecasts growth of between 2.3% and 3.3% in 2025, banking on a rebound in tourism, but warns of uncertainties surrounding the United States, one of its major trading partners, and its ongoing international trade offensive.
"Thailand is one of the most exposed countries in Asia to Trump’s plans for tit-for-tat tariffs with trading partners, so if these are implemented, Thailand’s merchandise exports will suffer," said Shivaan Tandon, an analyst at Capital Economics.
Factors Contributing to Growth
- Increased public investment: The government ramped up infrastructure spending and development projects, which stimulated economic activity.
- Export growth: Thailand’s exports, particularly of electronics and agricultural products, rose due to increased global demand and a weaker baht.
- Tourism rebound: The tourism sector saw a slight recovery, with more foreign tourists visiting the country, contributing to economic growth.
Lingering Challenges
- Weak private investment: Private investment remained subdued, as businesses hesitated to expand in the face of global economic uncertainty.
- High household debt: Thai households carry a high level of debt, which limits their spending and stifles economic growth.
- Trade tensions: Thailand is vulnerable to any escalation of trade tensions between the US and China, as it exports heavily to both countries.
- Political uncertainty: The upcoming national elections in 2025 could create political uncertainty, which could affect investor confidence and economic growth.
Policy Implications
The NESDC recommended that the government continue to focus on stimulating private investment, reducing household debt, and promoting exports. It also advised cautious monitoring of the global economic environment and trade tensions.
The central bank, the Bank of Thailand, is expected to keep its benchmark interest rate unchanged for the time being, as it balances the need to support economic growth with controlling inflation.
Conclusion
Thailand’s economy grew slightly in 2024, but remained below expectations and lagged behind regional peers. While there are positive signs of recovery, challenges remain, particularly in the areas of private investment, trade tensions, and political uncertainty. The government and central bank must navigate these challenges carefully to ensure sustainable economic growth in the years to come.
