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The Finance Ministry’s Fiscal Policy Office (FPO) projects Thai GDP growth of 2.7% for this year and 3% for 2025.
The FPO stated that its fiscal policies have been fully utilized to stimulate the economy, but additional support from monetary policy is necessary to enhance growth.
During the ministry’s economic projection briefing for 2024 and 2025 on Thursday, Director-General Pornchai Thiraveja confirmed that the 2024 growth forecast remains at 2.7%, within a range of 2.2-3.2%, unchanged from the estimate provided in July. This figure marks a recovery from last year’s 1.9% growth.
The growth is attributed to the rebound in tourism and exports, with foreign arrivals expected to reach 36 million this year, representing a 27.9% increase year-on-year, generating 1.69 trillion baht in revenue, a rise of 37.4%. The average spending per tourist is estimated to be 47,000 baht. As of October, Thailand has welcomed 28.4 million foreign visitors, yielding 1.3 trillion baht in revenue.
Mr. Pornchai noted that the growth is bolstered by private consumption, which is expected to rise by 4.6% due to the government’s 10,000-baht cash handout. Exports are projected to increase by 2.9%, while government consumption and investment are anticipated to grow by 2.1% and 0.8%, respectively.
However, private investment is predicted to decline by 1.9% this year, in contrast to last year’s 3.2% growth, primarily due to lower sales of internal combustion engine vehicles.
Considering the economic stability, the FPO forecasts a headline inflation rate of 0.4%, which is outside the Bank of Thailand’s inflation target of 1-3%, mainly due to decreasing crude oil prices. Deflation is considered unlikely as the economy continues to grow, according to the office.
The current account surplus is projected to reach $10.3 billion, or 1.9% of GDP, exceeding the $7.4 billion surplus recorded in 2023, while the trade surplus is expected to be $13.5 billion, down from $19.4 billion last year.
Looking ahead, the FPO anticipates a growth rate of 3% for 2025, within a range of 2.5-3.5%, which would be the highest increase since the pandemic years of 2020-2021. This forecast aligns with the International Monetary Fund’s outlook for Thailand.
Key factors supporting the 2025 outlook include an expected private consumption growth of 2.9%, an export increase of 3.1% due to global demand and improved conditions in key trading partners, and a rise in tourism, with foreign arrivals anticipated to reach 39 million, an 8.3% increase.
Private investment is expected to grow by 2.3% next year, bolstered by large-scale projects approved by the Board of Investment, particularly in high-tech industries. Public investment is projected to rise by 4.7%, driven by expedited budget disbursement and government initiatives like the Laem Chabang Port Phase 3, double-track railway projects, and the high-speed rail linking three airports.
In terms of economic stability for 2025, the FPO predicts a headline inflation rate of 1%, with the current account surplus estimated at $10 billion and a trade surplus of $12.5 billion.
The office highlighted key risks to monitor, including geopolitical challenges, the upcoming US presidential election, and concerns regarding household and corporate debt.
Mr. Pornchai indicated that the Finance Ministry plans to begin normalizing fiscal policy by gradually reducing the budget deficit in alignment with the government’s medium-term fiscal strategy, aiming for a budget deficit close to 3% of GDP.
For fiscal year 2025, the government anticipates a budget deficit of 4.5% of GDP, which is expected to decrease to 3.5% in 2026, dependent on GDP growth figures from the National Economic and Social Development Council.
He mentioned that fiscal policies have been fully leveraged recently, resulting in an expected government debt level of 65-66% of GDP next year, which is below the fiscal sustainability threshold of 70%. He emphasized that monetary policy needs to play a supportive role in stimulating the economy if growth targets above 3% are to be achieved.
Mr. Pornchai cited Section 28/7 of the Bank of Thailand Act, which mandates that inflation targets set by the Monetary Policy Committee must align with government policies. Under Section 7, monetary policy must ensure the stability of financial institutions while considering government policy.
