Thailand’s economy is set to continue its gradual recovery, with projected growth of 2.7% in 2024 and 2.9% in 2025, according to the latest International Monetary Fund (IMF) report. These projections reflect optimism driven by government fiscal measures, a pickup in public investment, and robust private consumption, though the road ahead remains challenging due to domestic and global risks.
2024: Recovery Gains Momentum
After modest growth of 1.9% in 2023, Thailand’s economy expanded by 2.3% in the first three quarters of 2024, primarily fueled by a rebound in tourism and strong private consumption. Tourism has recovered to nearly 90% of pre-pandemic levels, a significant boost for the country’s services sector.
However, sluggish public investment—contracting by -2.3% in early 2024—due to delays in budget approval, slowed overall momentum. Public spending increased marginally by 1.6%, reflecting slower-than-anticipated fiscal execution.
Despite these hiccups, government-led fiscal stimulus measures under the FY2025 budget are expected to help sustain growth in 2024. Inflation, which remains low, is forecasted to gradually rise and align with the Bank of Thailand’s target range of 1–3% by the end of the year.
2025: Moderate Growth, But Uncertainty Lingers
Growth is expected to edge up to 2.9% in 2025, driven by continued public investment and an influx of foreign direct investment (FDI). Private consumption is likely to remain a key engine of growth, bolstered by ongoing government support.
However, the IMF highlights significant risks that could dampen the outlook:
- Global Trade Tensions: Rising uncertainty in international trade could harm Thailand’s export sector and discourage FDI inflows.
- Commodity Price Volatility: Fluctuating prices might trigger inflation spikes and strain household budgets.
- Private Sector Debt Overhang: High household debt could impair credit supply and weigh on economic growth if defaults increase.
Policy Recommendations: Balancing Recovery with Long-Term Goals
The IMF underscores the need for Thailand to balance its short-term recovery efforts with long-term economic resilience. Key recommendations include:
- Fiscal Consolidation: Starting in FY2026, a revenue-based plan to gradually reduce public debt while supporting growth.
- Monetary Easing: The IMF supports further cuts in Thailand’s policy rate to stimulate growth and improve borrowers’ ability to manage debt.
- Household Debt Reform: Comprehensive measures to address household debt, including enhanced financial literacy programs and effective bankruptcy proceedings.
Boosting Productivity Through Structural Reforms
Thailand faces a critical need to reverse its declining potential growth through structural reforms. The IMF calls for:
- Digitalization: Leveraging technology to boost export sophistication and competitiveness.
- Labor Upskilling: Enhancing workforce skills to meet the demands of a changing economy.
- Governance Strengthening: Improving transparency and efficiency across public and private sectors.
- Infrastructure Investment: Upgrading physical and ICT infrastructure to support a digital and green economy.
Additionally, enhancing social protections could shield vulnerable households from economic shocks and address structural issues like household debt accumulation.
A Challenging but Promising Path
While Thailand’s economic outlook is one of moderate recovery, significant risks remain. Resolving structural challenges, rebuilding fiscal space, and implementing comprehensive reforms will be key to ensuring sustained growth and resilience in the coming years.
The IMF’s final report, which will include these findings, is scheduled for discussion in early 2025.
