Thailand’s Economy Forecast to Grow Faster in 2024 with Private Consumption and Tourism, But Uncertainties Remain

According to the minutes of the Bank of Thailand’s April 10 monetary policy meeting, the country’s economy is expected to grow faster in 2024 compared to 2023. This growth will be supported by private consumption and tourism, but uncertainties still remain. During the meeting, the monetary policy committee voted 5-2 to keep the one-day repurchase rate steady at 2.50%, which is currently its highest level in over a decade. Two committee members were in favor of a quarter-point cut. The next rate review is scheduled for June 12.

The Bank of Thailand adjusted its 2024 economic growth forecast to 2.6%, up from its previous projection of 2.5%-3.0%. However, this growth rate is lower than the government’s forecast for this year, which stands at 4%. The government believes that fiscal stimulus measures are necessary to support economic growth in the coming years. Despite these efforts, there are still significant uncertainties surrounding the Thai economy, particularly related to export recovery and government budget disbursement.

Prime Minister Srettha Thavisin has been openly challenging the central bank over its monetary policy and has been advocating for rate cuts to help deal with issues such as high household debt and China’s economic slowdown. In recent months, he has also approved a massive digital wallet stimulus scheme worth $13.5 billion (500 billion baht) aimed at boosting economic growth in 2025 by contributing around 1.8 percentage points to GDP growth.

Thailand’s economy unexpectedly contracted by 0.6% in the final quarter of 2023, with full-year growth coming in at just below expectations at 1.9%. Despite these challenges, both the government and central bank are working on measures to support economic growth in the coming years.

In summary, while private consumption and tourism are expected to support faster economic growth in Thailand next year compared to last year, uncertainties remain around key factors such as export recovery and government budget disbursement. The Bank of Thailand remains cautious about monetary policy decisions and has kept interest rates steady despite pressure from Prime Minister Srettha Thavisin who has been advocating for cuts.

Furthermore, while there have been some recent government initiatives aimed at boosting economic growth through fiscal stimulus schemes like digital wallets stimulus scheme worth $13 billion (500 billion baht), it remains uncertain how effective they will be in addressing long-term challenges facing Thailand’s economy.

Overall, it seems that Thailand is taking steps towards a more sustainable future but still faces several obstacles that need to be overcome before achieving sustained economic growth in the long term