The minutes at the meeting of the Bank of Thailand’s board members in December showed that 2025 will be a challenging year with the uncertainty of Trump’s policy and prolonged war. Still, Thailand is expected to exhibit a 2.9% growth in 2025 with tourism taking the lead.
The Global Economy and Financial Markets
Trading partner economies are anticipated to witness a growth rate of 2.8% in 2024, followed by a slight dip to 2.7% in 2025, primarily attributed to uncertainties stemming from policy adjustments in major economies.
The U.S. economy is displaying robust growth propelled by heightened levels of consumption in both goods and services, with a sustained trajectory expected to extend into the year 2025.
Conversely, the growth outlook for the EU economy remains tempered, contrasting with optimistic projections for a rebound in the Chinese economy driven by merchandise exports and governmental stimuli.
Asian economies are on an upward trajectory, with a resurgence in merchandise exports, particularly influenced by the ebb and flow of the electronics cycle.
Heightened uncertainties loom in the sphere of U.S. economic policies, encompassing tax revisions and import levies, with the potential to steer global economic patterns. Geopolitical instabilities, notably in confounded regions such as the Middle East, demand vigilant oversight owing to the probable economic reverberations they may trigger.
Post the U.S. presidential election, the financial markets in the U.S. outshone their regional counterparts, with escalated asset prices and an appreciation of the U.S. dollar. Apprehensions surrounding U.S. economic policies have imposed strains on asset valuations and cross-border capital movements within regional economies, particularly impacting countries like China and prompting capital outflows.
The majority of regional currencies, including the Thai baht, have witnessed depreciation vis-a-vis the robust U.S. dollar, propelled by their economic interconnections with China and oscillations in gold prices.
Domestic Economy
The Thai economy is prognosticate to burgeon by 2.7% in 2024 and further by 2.9% in 2025, notwithstanding challenges posed by external competitors and uncertainties. The tourism sector is poised to act as the cornerstone for growth, with an anticipated influx of 36 million tourists in 2024 surging to 39.5 million in 2025.
Private consumption is foreseen to sustain growth, although a deceleration is on the horizon. Envisaged improvement in exports of electronics and machinery aligns harmoniously with the prevailing technology product cycle. The resumption of growth in private investment is on the cards for 2025, fortified by the issuance of investment promotion certificates by the Board of Investment (BOI).
Economic Recovery and Credit Landscape in Thailand showcase an uneven trajectory characterized by propulsive growth in the tourism and service sectors, juxtaposed against a contracting automotive industry with a stark 19% production decline on a yearly basis. This downturn in automotive production can be attributed to the pivot towards electric vehicles and dwindling used car prices, causing a setback in consumer purchasing patterns.
Enhanced ambiguities stemming from U.S. economic policies have cast a shadow on the forecasted merchandise exports and investment patterns in Thailand, especially concerning relocations of production facilities.
Inflation forecasts depict a 0.4% projection for 2024, ascending to 1.1% in 2025, driven by stable energy prices and governmental interventions. The credit landscape for Small and Medium-sized Enterprises (SMEs) and manufacturing segments suggests a deceleration in credit extension due to heightened credit risks and mounting competitive pressures, necessitating vigilant monitoring of credit quality and overarching economic implications.
