Thai Central Bank Anticipates Steady Economic Growth Despite Uncertainties

Thailand’s economy is projected to expand by 2.7% in 2024 and 2.9% in 2025, fueled by growth in tourism, private consumption, and exports of electronics and machinery. However, the recovery in the industrial sector, particularly automotive manufacturing, remains slow, contributing to disparities in household income growth.

Key Takeways

• The Monetary Policy Committee (MPC) maintained the policy interest rate at 2.25% to support economic stability. The MPC noted inflation aligns with their targets and highlighted the importance of a strong monetary framework to manage growing uncertainties.
• Thailand‘s economy is anticipated to grow by 2.7% in 2024 and 2.9% in 2025, led by tourism, private consumption, and electronics exports. However, industrial sector recovery is slow, particularly in automotive manufacturing, causing household income disparities.
• Inflation is expected to remain below target, with forecasts at 0.4% in 2024 and 1.1% in 2025, due to stable oil prices. Credit growth has slowed, non-performing loans have risen post-COVID-19 relief, and the EV market impacts automotive loans. The MPC monitors credit and government debt relief programs.

The Monetary Policy Committee (MPC) wrapped up its final 2024 meeting, opting to hold the policy interest rate steady at 2.25% per annum. This decision is intended to foster long-term economic stability, as inflation aligns with the target. The MPC highlighted the importance of a robust monetary policy to counter rising uncertainties.

Thailand’s economy is anticipated to grow by 2.7% in 2024 and 2.9% in 2025, driven by advancements in tourism, private consumption, and exports of electronics and machinery. Despite these positive trends, the industrial sector recovery remains sluggish, especially in automotive manufacturing, impacting household income growth disparities.Thailand’s government is expected to implement supportive fiscal policies to stimulate economic activity, focusing on infrastructure development and incentives for foreign investment.

However, external risks such as global economic uncertainty and geopolitical tensions could pose challenges to export performance. Additionally, structural issues like labor shortages and uneven regional development may hinder long-term growth prospects, requiring targeted reforms to enhance productivity and competitiveness across sectors.

Inflation is expected to stay low, at 0.4% in 2024 and 1.1% in 2025, thanks to stable global oil prices. However, global trade policies and geopolitical risks pose ongoing economic uncertainties.

Credit growth has decelerated, reflecting reduced investment in key sectors, while non-performing loans (NPLs) have risen post-COVID-19 relief. The increasing prevalence of electric vehicles (EVs) has impacted the automotive loan market, with SMEs in high-risk industries facing tougher credit conditions.

The MPC is actively monitoring credit expansion and government initiatives, such as the “Khunsoo Rao Chuay” program, designed to alleviate debt for vulnerable groups, support financial stability, and aid sectors under economic pressure.

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