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After nearly three months in office, the outlook for the Paetongtarn Shinawatra government is likely to be influenced by several anticipated new stimulus proposals that are expected to be revealed in unison. The National Economic and Social Development Council (NESDC) last week forecast a Thai GDP growth rate of 2.3-3.
3% in 2025, with an average of 2.8%. Despite a more promising outlook for next year, the NESDC warned that household debt is soaring, coinciding with concerns from the business sector that the government needs to improve in a number of areas to achieve the growth rate projected by the planning agency.
STILL WAITING Thienprasit Chaiyapatranun, president of the Thai Hotels Association, said the government has yet to effectively stimulate economic growth as expected. He said the tourism industry next year should continue to be a major driver of GDP with 40 million foreign tourists expected to arrive, while growth in other industries may remain stagnant. Mr Thienprasit said there are gaps that could be filled to increase the number of arrivals and spending by tourists, such as promotions during the low season that include attractive programmes and campaigns.
Regarding the hospitality sector, he said the government could support the market during the low season by increasing the budget available to organise governmental and public sector meetings and conferences across the country. Foreign investment should also be accelerated, including large projects such as the proposed Land Bridge and the development of comprehensive entertainment complexes that include casinos, said Mr Thienprasit. He said the government's initiative to lure technology investment to Thailand is a good idea, as data centre projects would help create jobs and business opportunities.
With the government's priority the 10,000-baht handout aimed at lifting domestic consumption, Mr Thienprasit said the outcome of the scheme remains unclear when compared with investments in major infrastructure projects. He said it would be more productive and practical if the government instead worked to ease the debt burden of many Thais, as this would eventually increase people's spending power. HURDLE ON THE HORIZON Exports will continue to play a key role in driving Thailand's GDP next year, but the country needs to ensure products labelled as made in Thailand are actually produced by Thais, said Tanit Sorat, vice-chairman of the Employers' Confederation of Thai Trade and Industry (EconThai).
If these goods are produced by Chinese manufacturers, this may negatively affect the export sector, he said. This could become a serious issue if Chinese companies try to avoid the higher tariffs US President-elect Donald Trump has vowed to impose on Chinese products by exporting goods to the US via Thailand, Mr Tanit said. A close examination of goods that are produced, processed and packed in Thailand both for domestic sale and export may be required to ensure the products were actually manufactured by Thai companies.
"They may be made by Chinese entrepreneurs in Thailand," he said. "We don't know whether this will become an issue, which could cause the Trump administration to launch retaliatory measures against Thailand." Trump announced he would impose tariffs of 10-20% on all imported products, with tariffs of between 60-100% on goods imported from China, according to media reports.
Thailand and other countries, especially those that have a trade surplus with the US, are likely to face tariffs of 10-20%, said Mr Tanit. The new US foreign trade policy will likely have a limited impact on Thai exports to the US, he said. EconThai believes exports and tourism will continue to drive the Thai economy next year.
A glance at growth forecasts from various state agencies led Mr Tanit to predict a rate of 2.9% next year. "Our economy is growing, but its growth rate will be lower than those of neighbouring countries," he said, adding Southeast Asia is expected to grow by 4-5% in 2025.
He applauded the new government for its stimulus efforts. "The 10,000-baht handout should help the economy somewhat as it indirectly helps some businesses to maintain their employment," said Mr Tanit. CHAMBER UPBEAT ON GROWTH Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said he believes Thailand's GDP will grow by 3% in 2025, based on the NESDC forecast, as the economy gradually recovers next year.
The fiscal 2025 budget was already approved, so the implementation of various policies, including government stimulus measures, will be able to proceed smoothly, he said, helping to drive the economy forward during the coming year. Thai exports were affected by baht strength earlier this year. The value of exports for the first nine months of 2024 tallied US$223 billion, up 3.
9% year-on-year, indicating the export sector continues to be a key driver of the economy, said Mr Sanan. Officials expect Thailand will start to register more investments in new S-curve industries, propelling the export sector and GDP growth next year. The tourism sector is projected to fully recover in 2025 as Thailand recorded more than 30 million foreign arrivals during the first 11 months of 2024, which represents 85% of the target of 35 million arrivals set for 2025.
If the government can accelerate the promotion of Thailand's soft power through various events and position the country's festivals on the global calendar, he said it will help raise awareness among foreign tourists, attracting high-income tourists to visit or live here. This would increase tourism revenue and create jobs, improving income distribution, said Mr Sanan. In terms of consumer spending, the government already started disbursal of the fiscal 2025 budget and implemented various stimulus measures.
In addition, the government's recent debt relief measures should help generate liquidity in the economy, he said. Moreover, the government needs to accelerate efforts to attract foreign direct investment into Thailand by leveraging the opportunities presented by Trump's foreign trade policy, said Mr Sanan, which could restore confidence among both Thai and foreign investors. SOURCE OF INSPIRATION Chak Reungsinpinya, head of research at Maybank Securities (Thailand), said the brokerage is feeling more bullish and hopeful regarding Thailand's economic future following recent discussions with Finance Minister Pichai Chunhavajira.
According to Mr Chak, the finance minister said some policies are short-term but much-needed, including the cash handout and debt restructuring schemes addressing the economic slowdown. "Mr Pichai emphasised the need to maintain fiscal discipline and expects the budget deficit to fall below 4% of GDP in the fiscal 2025 budget, keeping government debt-to-GDP below 70%, compared with 65% now," he said. Mr Pichai also said the investment budget must exceed the deficit level, meaning that current expenditure needs to be financed solely by government receipts.
Over the longer term, tax reforms are needed to help close the fiscal gap, said Mr Chak. "This includes potentially lower personal and corporate income taxes, but higher value-added tax with excess government receipts going towards low-income earners via social programmes," he said. Following the initial 10,000-baht handout in October, Maybank expects Thai GDP growth to reach 3.
4% in the fourth quarter of 2024, bringing full-year growth to 2.6%. The brokerage maintained its 2025 GDP projection of 2.
8%, with public investment and public consumption remaining the key drivers. "We are mindful of risks to growth from rising trade barriers, especially if the US trade policy targets exporting nations that are closely integrated with China's supply chains," Maybank said in a research note, adding consumer indebtedness need to be reduced to a more manageable level for private consumption growth to recover. "The authorities are planning to implement debt restructuring programmes to address household debt, but these will take time to take effect and support consumption.
" Prakit Siriwattanaket, managing director of Merchant Partners Asset Management, said the government recently introduced policies to address persistent problems such as high debt levels, in addition to short-term stimulus. In his view, increased government budget disbursement is the main reason Thai GDP exceeded the market forecast of 2.7% in the third quarter this year.
"The government deserves credit for increasing budget disbursement from 50 billion baht in August to 89 billion in September. This is what prior administrations wanted to do, but could not accomplish," said Mr Prakit. He said the market expects the Bank of Thailand's Monetary Policy Committee to further trim the policy rate in December to spur economic growth.
UNEXPECTED DEVELOPMENT Amonthep Chawla, chief economist at CIMB Thai Bank (CIMBT), described the 3% year-on-year GDP growth in the third quarter recently as unexpectedly strong, exceeding the bank's forecast of 2.2%. According to the NESDC's latest data, public spending and domestic consumption exceeded the bank's expectations.
Foreign tourist arrivals aligned with the bank's forecast and remained a key driver of Thailand's economic growth, he said. Following the NESDC's announcement of third-quarter results, CIMBT's research centre is revising its growth forecasts for 2024 and 2025. The centre is also awaiting updated economic data from the central bank.
However, Mr Amonthep said the bank does not expect the country's growth rate for the fourth quarter to reach 4% year-on-year, citing the central bank's assessment that weaker purchasing power among low-income groups, particularly vulnerable and agricultural households, will weigh on economic performance. He said the second phase of the government's 10,000-baht cash handout is unlikely to significantly boost economic growth in the final quarter, as the target beneficiaries, primarily elderly individuals, are expected to spend conservatively. "Initially, we planned to revise our GDP growth forecast for this year to 2.
6-2.7% from 2.3%, but the new projected figures are likely to fall just short of 3%," said Mr Amonthep.
Thitima Chucherd, head of economic and financial market research at SCB EIC, said the centre plans to slightly boost its 2024 Thai growth projection to 2.6% from 2.5% following the NESDC's third-quarter report.
EIC predicted third-quarter GDP growth of 2.6%, aligning with forecasts by other research houses in a range of 2.4-2.
6%. The government's various stimulus initiatives, including the second phase of the cash handout programme, are expected to contribute 0.6-0.
8 percentage points to growth. As a result, the country's GDP growth in the fourth quarter of 2024 could potentially reach 4% year-on-year, noted the research centre. For 2025, Ms Thitima said the Thai economy is expected to face greater challenges, particularly from potential changes in US foreign trade policies under the new administration, which could negatively impact exports in the second half of the year.
As a consequence, Thailand's economic growth next year may fall below the current projection of 2.6%, noted EIC. She said EIC is awaiting further details on the implementation of stimulus packages and US economic policies before making final adjustments to its forecasts.
Surrounded by leaders and members of coalition parties, Ms Paetongtarn, centre, makes a point ahead of a meeting to discuss the controversial Koh Kut border issue and referendum bill at Government House on Nov 4. Chanat Katanyu Tourists and locals make their way around Chatuchak weekend market in Bangkok. Nutthawat Wichieanbut A woman collects plastic bottles to be sold for recycling.
A CIMBT economist believes the second phase of the state's cash handout is unlikely to significantly boost growth in the final quarter, as the target beneficiaries, primarily elderly individuals, are expected to spend conservatively. Apichart Jinakul.
