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13 Mar 2024

Thai Economy

Reinventing Thailand’s Growth Model (Press Conference 13 March 2024)

        KASIKORN RESEARCH CENTER (KResearch) has downgraded its Thai economic projection for 2024 to growth of 2.8 percent, from its previous forecast of 3.1 percent issued in December 2023.
        Mr. Burin Adulwattana, Managing Director and Chief Economist, KASIKORN RESEARCH CENTER Co., Ltd. (KResearch), said, “The global economy in 2024 is expected to grow at the same level as was seen in 2023. Global trade is likely to resume growth while global interest rates will gradually decline as inflation falls to the target level set by central banks worldwide. China continues to face the challenge of its ailing property sector, thus far unresolved amid its weak economy, which would lead to ebbing domestic demand and price reductions by manufacturers to maintain their market share. Meanwhile, the US Federal Reserve (Fed) has assessed that the US economy remains in good shape while signaling a policy rate reduction this year. The financial markets expect that the Fed will start lowering interest rates in June 2024”.  
        The Thai economy in 2024, however, is projected to grow at a slower rate. KResearch has downwardly revised its 2024 growth forecast for the Thai economy to 2.8 percent, from the prior estimate of 3.1 percent, as growth momentum in domestic demand remains weak, while the manufacturing sector continues to contract, and household debt remains high, as reflected in the contraction in domestic car sales for many consecutive months. 
        ​Support for the Thai economy in 2024 is expected to come from the resumption in government budget disbursements, 2 percent growth projected for merchandise exports, and potential growth in the number of international tourist arrivals in Thailand to 36 million. Additionally, KResearch views that the Bank of Thailand has ended its upward interest rate cycle at 2.5 percent and will likely cut its policy rate approximately twice in the remainder of 2024. The inflation rate is projected to stand at 0.8 percent. 
        In the context where global trade protectionism remains evident, the trend of carbon taxation and AI technology could have extensive impacts worldwide. Thailand faces multiple structural challenges and must swiftly find new mechanisms to drive its economy. KResearch holds the view that the key to success – whether it be the transition to an EV hub or data center hub, or increased foreign investment in various forms – is to have a sufficient supply of clean energy at a reasonable cost. This would foster green economic activities and help reshape the country’s economic structure.

Thai Economy