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Thai Economy Forecast 2024: Analysts Lower Growth Predictions, What’s Causing the Slowdown?

in the past week Analysts and economic research centers have lowered their forecasts for the Thai economy in 2024. What is the cause?

Let’s start with KKP Research, which Kiatnakin Phatra Financial Business Group estimated that The Thai economy in 2024 will grow at 2.6% from the original expected growth of 3.7% (the previous estimate excluding the results of the Digital Wallet policy was 2.9%), with a downward adjustment from 3 factors:

  • Removing the results of the Digital Wallet policy from the base case in economic projections from the uncertainty and uncertainty in policy implementation
  • The industrial production figure was revised down to reflect higher-than-usual inventory levels and reduced competitiveness. (Due to the industrial goods production sector shrinking for 5 consecutive quarters)
  • Per capita tourist income has dropped much lower than before the Covid-19 outbreak and is likely not yet back to normal.
  • However, KKP Research predicts that the Thai economy will be able to grow better in the second half of 2024 when government budget disbursements will resume to compensate for the slowdown in the previous period. and industrial production and inventory levels returned to normal. But it is expected that the baht direction has a chance of depreciating more than before. At the same time, it is seen that the government sector needs to implement fiscal policy and economic reform policy to solve economic problems from the structure along with short-term economic stimulation.

    In addition, KKP Research also predicts that

    • Inflation in 2024 will be low at 0.8%.
    • Inflation in 2025 will be low at 0.9%.
    • It is expected that the MPC will cut the policy interest rate 2 times in 2024 and 1 time in 2025.
    • It is estimated that the Thai economy in 2025 will grow by 2.8%, following the trend of the Thai economy’s growth potential starting to decrease due to structural problems.

    Source: KKP Research

    As for the TTB Economic Analysis Center (ttb analytics), the latest yesterday (22 Feb.) revealed that it has reduced Thai GDP in 2024 to 2.6% fromThe original forecast for December was for growth of 3.1%. Because it is considered that the Thai economy is still recovering quite slowly. And there are risks all around.

    It also emphasizes that “The Thai economy tends to slow down more after every crisis. This causes the short-term economic recovery to be very slow. In the long run, it is likely to expand at a low rate, averaging less than 2.0% per year. In addition, the momentum of the Thai economy is recovering more slowly than many countries, most of which are likely to grow better than in the past.”

    This year 2024, although at the beginning of the year the Thai economy gained momentum from consumption. and tourism that improved due to the benefits of the festival period But the short-term supporting factor may only be the recovery of the tourism sector, which is still highly uncertain. Meanwhile, overall investment recovery was delayed. Including exports, there is a limited tendency to expand.

    As for inflation in 2024, it is likely to be lower than the target frame. But it has not yet entered a state of deflation. It is expected that headline inflation will be at 0.8% amid much tighter monetary policy implementation. This results in the real interest rate. Thailand’s (relative to core inflation rate) is currently around 2.0%, which is higher than comparable countries like Malaysia and South Korea. and higher than the United States at 1.0%.

    Source: ttb analytics

    While Pimnara Hirankasi, head of the economic research team Bank of Ayudhya revealed that the Thai economy in 2024 will recover in an undispersed way and remains highly uncertain. It is expected to expand at 2.7% in 2024 (from the original expectation of 3.4%, excluding the results of the Digital wallet measure) There are 4 domestic supporting factors.

  • Continued recovery of the tourism sector The number of foreign tourists is expected to reach 35.6 million in 2024 (from 28.2 million in 2023).
  • Private consumption continued to grow at 3.1%.
  • Government spending will play a greater role in driving the economy from the second quarter of 2024, which will result in government consumption and investment returning to expand at 1.5% and 2.4%, respectively, from contraction in 2023.
  • Private investment is expected to grow 3.3% from the service sector and groups related to infrastructure investment. Including government policies to promote important industries.
  • Source: Bank of Ayudhya

    However, there are still negative factors, including the export sector still showing a low growth trend. from the economies of trading partners that may slow down It is expected that Thai exports will expand only 2.5% in 2024 from a contraction of 1.7% in the previous year. Moreover, there is the problem of high household debt amid rising borrowing costs. The effects of drought may be more severe. including structural problems such as an aging population labor shortage and reduced competitiveness in many industries

    Meanwhile, the average general inflation rate for the entire year 2024 is expected to remain at a continuously low level of 1.1%, slightly slowing down from 1.2% last year. Mid-year 2024 onwards to support continued economic recovery.

    However, it is seen that the Thai economy still has negative factors that need to be monitored, including:

    • The impact of interest rates in the world’s core countries, which are the highest in more than two decades, may put pressure on the global economy and the financial sector.
    • Chinese economic slowdown amid fragility in real estate sector
    • Risk of economic stagnation in Europe
    • Drought conditions due to the El Niño phenomenon
    • The Russo-Ukrainian War and Middle East Tensions
    • Economic polarization led by the US and China

    Source: KKP Research, TTB Economic Analysis Center, Bank of Ayudhya

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    2024-02-23 11:12:30
    #KKPttbKrungsri #cuts #GDP #Thai #economy #recovering #slowly #eye #risks #Brand

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