Mr. Tim Leelaphan, Assistant Managing Director of Thailand and Vietnam Economics Department at Standard Chartered Bank (Thai), stated that the bank speculated that the Thai economy in 2025 will grow 2.8% due to several factors that support the economic growth.
The main contribution will come from the recovery in the tourist sector, which saw the arrival of approximately 4 million tourists during January to February. This number is also the same rate in 2019. The bank also speculates that the tourist’s number will continue to grow in the later half of this year.
Meanwhile, there is a driving force pushing the Thai economy from the export sector toward a positive direction. However, the sector still faces the instability caused by the US trade policy and the decrease of car exports in 2024.
Nevertheless, there is still an additional support force from the private consumer sector, boosted by the government stimulus measure to stimulate consumption, especially from the digital wallet scheme. The next phase of this scheme will use about THB 140 billion, or 0.8% of Thai GDP, and begin in April. The assistant managing director noted that it remains to be seen to what extent this measure will boost the Thai GDP.
Furthermore, the bank estimated that Thailand’s core inflation this year will stay at 0.9%, aligning with the cautious growth. The bank also predicted that the general inflation will position at 1.3%, following a slight recovery in the consumer sector. This recovery may also cause the inflation rate to slow down during the middle of the year before speeding up.
As for the current account balance, the bank estimated its rate to stay at 4% of GDP, while the general inflation margin may retract back the framework of 1-3% that Bank of Thailand (BoT) set.
Moreover, the Monetary Policy Committee (MPC) may set the policy rate at 2.25% at the meeting on 26 February, supported by the continued recovery of the economy. Although the inflation rate is not very high, MPC may consider the rates based on the risk from the trade war and the economic recovery.
MPC may also lower the policy rates one time this year, which may happen during the meeting in June as the Federal Reserve showed signs of not being in a hurry to cut interest rates. BoT also shows no signs of lowering the interest rates while policy space remains as the main factor in delaying the decision on lowering policy rates this year.
