The Thai economy is expected to grow at an average rate of 2.8% annually over the next decade, driven by a resurgence in tourism, its role as a regional automotive hub, and the regional expansion of large Thai conglomerates, according to a report from DBS Bank.
The report, titled “Navigating High Winds: Southeast Asia Outlook 2024-34,” forecasts that the Southeast Asian economy will see an average annual growth rate of 5.1%, with Vietnam and the Philippines leading the charge, both experiencing GDP growth rates exceeding 6%. Indonesia is also projected to be a strong performer, with a growth rate of 5.7%.
Key factors supporting Thailand’s economy include the tourism recovery, its status as a vital regional automotive center with well-developed infrastructure, and the increasing regional presence of major Thai conglomerates such as Charoen Pokphand (CP), Central Group, PTT, Siam Cement, and Thai Union, which are more regionally integrated compared to their Southeast Asian counterparts.
Nonetheless, the report highlights ongoing challenges, including a volatile political climate, concerns regarding consolidation in critical sectors like retail and telecommunications, and demographic issues.
The report, prepared by the Angsana Council in collaboration with Bain & Company and DBS Bank, states, “Southeast Asia is likely to surpass China’s GDP and foreign direct investment (FDI) growth over the next decade.”
In the previous year, FDI in the six ASEAN economies covered amounted to $206 billion, while China attracted $43 billion. From 2018 to 2022, the ASEAN-6 countries saw their FDI grow by 37%, a stark contrast to China’s growth of 10%.
Southeast Asia is poised to outpace China
Charles Ormiston, an advisory partner at Bain & Company and chair of the Angsana Council, remarked, “Thanks to robust domestic growth and the China +1 strategy, we are becoming increasingly optimistic that Southeast Asia will surpass China in both GDP and FDI growth in the next decade.”
However, the competition for multinational investments is expected to intensify, enhancing outcomes for both businesses and consumers across the region.
DBS Bank’s Managing Director and Chief Economist, Taimur Baig, indicated that the global economy is likely to remain increasingly protectionist and inward-focused. He noted, “Most Southeast Asian economies and companies are well-positioned to seize opportunities as capital allocation adjusts across different geographies and sectors while navigating technological disruptions and climate change.”
In a separate analysis, BofA Global Research underscored the positive medium-term growth outlook for the six ASEAN countries, attributing it to strong investments and a promising FDI pipeline.
For 2024, the growth forecast stands at 4.7%, with anticipated momentum in the second half of the year fueled by a likely further recovery in tourism.
“For Thailand, we have not yet factored in the impact of the digital wallet, with registrations set to begin in August. Our baseline estimates suggest a net impact of around 0.4% of GDP, with most effects expected to materialize in 2025,” stated the BofA report.
