IMF predicts Thailand’s real GDP growth at 2.7% in 2024, 2.9% in 2025

The country’s economy is slowly recovering thanks to increased tourism and private consumption but low inflation remains a problem

The International Monetary Fund (IMF) has forecast 2.7% growth in Thailand’s gross domestic product (GDP) for 2024 and 2.9% for this year, mostly driven by continued recovery in the tourism industry.

In its “2024 Article IV Consultation with Thailand” report published on Thursday (February 20), the IMF’s executive board concluded that the kingdom’s economy is gradually recovering, but at a slower pace than its peers.

The report said economic activity expanded modestly by 1.9% in 2023 and 2.3% in the first three quarters of 2024, driven by growth in private consumption and a rebound in tourism.

Inflation remained subdued, averaging 0.4% (y/y) annually in 2024, well below the Bank of Thailand’s target range of 1 to 3%. External factors such as the decline in global energy and food prices plus lower import prices have played a role, but domestic factors such as energy subsidies, price controls, and the unwinding of pandemic-related fiscal support have also contributed to the lower inflation.The current account balance strengthened to 1.4% of GDP in 2023, from -3.5% in 2022, and continues to register a moderate surplus as of November 2024, supported by the continued recovery in tourism and higher exports, the report said.

The IMF said it expects Thailand’s gradual cyclical recovery to continue, with real GDP projected to grow by 2.7% in 2024 and to increase to 2.9% in 2025. This is underpinned by the expansionary fiscal stance envisaged under the 2025 budget, which includes additional cash transfers of 1.0% of GDP and a rebound in public investment.

The IMF expects tourism-related sectors to continue to support growth, as well as private consumption that will be further boosted by the authorities’ cash transfers. As growth continues to firm up, inflation is expected to pick up but remains in the bottom half of the target range in 2025. The current account balance is expected to improve further in 2024 and 2025, driven by the ongoing recovery in tourist arrivals.The report listed some risks to Thailand’s economic outlook, including an escalation of global trade tensions and deepening geoeconomic fragmentation which could disrupt export recovery and dampen FDI inflows, while increased commodity price volatility could affect growth and lead to inflation spikes, and potentially tighter-for-longer global financial conditions.

On the domestic front, the report predicted that the private sector debt overhang could impair financial institutions’ balance sheets and further decrease credit supply, negatively affecting growth. Renewed political uncertainty could also hinder policy implementation and undermine confidence, it added.

(2025/02/21-00:00)