Key View
- We are maintaining our projection for Thailand economy to expand by 3.0% in 2025 despite the less than stellar performance in Q4 2024.
- Growth will be held up by policy support, as the Pheu Thai digital wallet scheme is well underway. Moreover, the BoT will likely cut policy rates further in a bid to shore up the economy.
- However, risks are skewed heavily to the downside, as Trump’s reciprocal tariff plans could weaken Thailand’s external sector further.
The economy performed weaker than our estimate in Q4 2024, but it warrants no change to our 2025 growth forecast of 3.0%. Official data released on February 17 showed real GDP growth accelerating from 3.0% y-o-y to 3.2% in Q4, culminating in full-year growth of 2.5%. While this was the strongest pace of expansion in 2024, many analysts, including us, initially held a more optimistic view {BMI: 3.4%, Reuters: 3.9%}.
Thailand’s economy has shown resilience amidst challenging global dynamics, maintaining a steady growth rate of 3.0% despite external adversities. The nation’s recovery has been driven by robust domestic consumption and a burgeoning tourism sector, which have helped steady the ship amidst global volatility. This economic steadiness is further bolstered by the government’s effective fiscal policies aimed at encouraging investment and stimulating demand within the country.
However, the path ahead is fraught with potential challenges that could impact this growth trajectory. The global economic landscape remains unpredictable, with ongoing geopolitical tensions and fluctuating commodity prices threatening stability. Additionally, Thailand faces the looming threat of a global economic slowdown, which could curtail exports and dampen foreign investment. As such, maintaining this growth rate amid these “external headwinds” will require strategic economic maneuvering and adaptability from Thai policymakers.
To navigate these challenges, Thailand must focus on diversifying its economic base and exploring new growth opportunities. Strengthening regional ties and participating actively in international trade agreements could provide a buffer against external shocks. Additionally, investments in digital infrastructure and innovation could open new avenues for growth, ensuring the nation is well-positioned to weather global economic uncertainties. By fostering a more resilient and versatile economy, Thailand can sustain its growth momentum in the face of looming external headwinds.
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