SCB EIC cuts Thai 2024 GDP growth forecast from 3% to 2.7%

The SCB EIC has revised Thailand’s economic growth forecast for 2024 down to 2.7% from 3% due to challenges in the manufacturing sector, including slow recovery, diminished competitiveness in exports, and structural issues.

Key Takeaways

• SCB EIC revised down the Thai economic growth forecast for 2024 to 2.7% due to challenges in the manufacturing sector and delays in the 2024 Budget Act.
• The manufacturing sector faces structural challenges such as diminished competitiveness, slow recovery of overseas demand, and high accumulated inventory, hindering Thailand’s economic growth.
• SCB EIC foresees 2 policy rate cuts by the MPC in April and June to 2% to sustain a neutral monetary policy stance and alleviate the high debt burden for businesses and households.

The potential GDP growth is also expected to decline to 2.7% in the long term due to these challenges. The MPC is expected to cut the policy rate to 2% in order to sustain a neutral monetary policy stance and support long-term economic growth. These measures are aimed at alleviating the high debt burden and boosting economic confidence.

• GDP Growth Forecast: SCB EIC has revised down Thailand’s GDP growth forecast for 2024 to 2.7% from 3%, citing a moderation in economic momentum and structural challenges in the manufacturing sector.
• Manufacturing Sector: The recovery is hindered by issues such as diminished competitiveness, high inventory levels, and delays in the 2024 Budget Act.
• Policy Rate Cuts: SCB EIC anticipates the MPC will lower rates within H1/2024 to 2%, aligning with the lower neutral rate, to support economic growth and alleviate high debt burdens³.
• Long-term Outlook: The potential GDP growth for Thailand is projected to drop to 2.7% for 2024 – 2045, due to severe structural challenges and decreased total factor productivity.

SCB EIC predicts 2 policy rate cuts by the MPC

SCB EIC predicts 2 policy rate cuts by the MPC in April and June, bringing the rate down to 2% to align with the lower neutral rate. This is to sustain a neutral monetary policy stance, considering Thailand’s neutral rate has dropped to 2.1%.

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The cuts aim to support long-term economic growth, ease high debt burden for vulnerable businesses and households, and boost economic confidence amid limited public sector momentum.

Thai economic growth forecast for 2024

SCB EIC has revised the Thai economic growth forecast for 2024 to 2.7% from 3% due to a slowdown in economic momentum and the slow recovery of the manufacturing sector, attributed to structural challenges.

The overall economy is expected to continue its recovery in 2024, driven by increased growth in exports and private investments. However, challenges such as weakened momentum from the public sector, delays in the 2024 Budget Act, and high levels of accumulated inventory are expected to persist.

The manufacturing sector faces issues with competitiveness, adaptability to global demand patterns, and long-term supply chain dynamics, hindering its recovery trajectory and highlighting substantial structural challenges.

Source: In focus / SCB EIC cuts the Thai 2024 GDP growth forecast to 2.7% an a anticipates the MPC to lower rates within H1 following the lower neutral rate. | SCBEIC