Thailand’s economic growth in 2024 fell short of expectations and continued to lag behind its Southeast Asian neighbors, facing significant challenges from global trade policies and weak domestic demand. According to the National Economic and Social Development Council, the country’s economy grew by 2.5% last year, which was below the anticipated 2.7% indicated in a Bloomberg News survey, although it showed improvement from a revised 2% growth in 2023.
In the fourth quarter, the gross domestic product (GDP) rose by 3.2% compared to the same period the previous year, falling short of economists’ forecasts of 3.8%. Quarter-on-quarter, the economy expanded by 0.4% between July and September, compared to a median estimate of 0.5%.
Despite a recovering tourism sector and increasing exports, Thailand’s growth remains sluggish due to pressure on household consumption and manufacturing. The ongoing impact of Donald Trump’s tariff policies and the U.S.-China trade rivalry poses additional vulnerabilities for Thailand, particularly given its substantial trade surplus with the U.S. and the influx of inexpensive Chinese goods, which could worsen as further tariffs are imposed.
Bank of Thailand Governor Sethaput Suthiwartnarueput highlighted trade policy challenges as a significant concern, noting that the flood of imports has hindered Thailand’s recovery and severely affected the manufacturing sector. Local reports have indicated that numerous Thai factories struggle to compete with cheaper imports, leading to closures in recent years.
In 2024, Thailand recorded a trade surplus of $35.4 billion with the U.S. and is looking to increase imports of U.S. ethane and agricultural products to avoid tensions with the U.S. administration, which plans to target countries that sell more to the U.S. than they purchase.
The National Economic and Social Development Council (NESDC) maintains its growth forecast for 2025 at 2.3% to 3.3%. NESDC chief Danucha Pichayanan emphasized that boosting domestic consumption is critical for growth, predicting a 3.3% increase in private spending and a 1.3% rise in government consumption.
Uncertainty surrounding U.S. trade policies presents a key risk for Thailand. Danucha stated, “We will monitor closely and develop measures to negotiate with the U.S. We are under scrutiny due to our high trade surplus.” After the report, the Thai baht remained stable, while the main stock index opened lower.
At the domestic level, Prime Minister Paetongtarn Shinawatra is implementing cash handouts to stimulate growth and is exerting pressure on the central bank to lower borrowing costs. The central bank, which maintained a policy rate of 2.25% in December after a surprise quarter-point cut in October, is scheduled to review the interest rate on February 26.
–With contributions from Pathom Sangwongwanich, Niluksi Koswanage, Michael J. Munoz, and Shinjini Datta.
Credit: Live Mint
