Abstract
SCB EIC has revised Thailand’s economic growth forecast for 2024 to 2.7% due to challenges in the manufacturing sector, delays in the budget act, and geopolitical risks. The manufacturing sector faces structural issues hindering its recovery, impacting overall economic growth. SCB EIC predicts two policy rate cuts by the MPC in April and June to 2% to maintain a neutral monetary policy stance and support long-term economic growth while easing debt burdens for businesses and households.
Summary
Thai Economic Growth Forecast for 2024
SCB EIC revises the Thai economic growth forecast for 2024 to 2.7% due to a moderation in economic momentum and the slow recovery of the manufacturing sector, attributed to structural challenges. The overall economy is expected to continue its recovery, driven by accelerated growth in various demand-side factors like exports and private investments. However, challenges include delays in the 2024 Budget Act and high levels of accumulated inventory within the manufacturing sector, limiting its recovery trajectory.
Weak Manufacturing Conditions Challenge Thai Economic Growth
SCB EIC projects a rebound in the manufacturing sector in 2024 driven by consumer goods recovery but expects growth to stall due to demand-side and supply-side pressures. Challenges include higher import penetration, slow overseas demand recovery, delays in the 2024 Budget Act, high inventory levels, and geopolitical risks. Thai exports face decreased competitiveness and struggle to adapt to global demand patterns, hindering growth.
Structural Challenges Within the Manufacturing Sector Lower Thailand’s Potential Economic Growth
Thailand’s potential economic growth is decreasing, with SCB EIC estimating a drop in long-term GDP growth due to severe structural challenges in the manufacturing sector. Factors such as the interdependence with the Chinese economy, limited adaptive capacity to global supply chains, and slow adjustments to changing demand patterns contribute to this decline. Anticipated policy rate cuts by the MPC in April and June aim to sustain a neutral monetary policy stance and support economic growth while alleviating high debt burdens.
