Krungsri Research sees the Thai economy in 67 growing at less than 3%, expecting to see the MPC reduce interest rates this year.
Consumer confidence improved to its highest level in nearly four years, but weak economic growth in the last quarter of last year dragged down GDP for both 2023 and 2024. Krungsri Research has lowered its forecast for Thailand's economy in 2024 to below 3%, and the likelihood of the Bank of Thailand cutting interest rates this year has increased.
On February 20, 2024, Krungsri Research stated that continued consumer confidence, coupled with government measures, is expected to boost spending growth in the early part of the year. The consumer confidence index in January increased for the sixth consecutive month, reaching its highest level in 47 months at 62.9, up from 62.0 in December. Positive factors include economic stimulus measures such as supporting spending through the Easy-e-receipt project, alleviating the burden of living costs related to energy prices, and stimulating the tourism sector with visa-free programs for tourists from several countries.
However, consumers are still concerned about the country's low economic growth and slow recovery. Drought conditions that may affect income and production in the agricultural sector, as well as the still protracted global geopolitical conflict situation that may result in world oil prices remaining stable and affecting the cost of product production and Domestic purchasing power
In the first quarter of this year, private consumption is expected to continue to grow. Supporting factors from
(i) Confidence remains positive, as reflected in the projected 6-month outlook index, which continues to rise to 70.9, the highest level since March 2563.
(ii) The continued recovery of the tourism sector has supported employment and increased income for workers in the service sector. From the beginning of the year until February 11, there were a total of 4.4 million foreign tourists, generating revenue of 2.15 billion baht for the country.
and (iii) government measures including measures to alleviate the cost of living, debt relief for farmers, and solutions to the entire debt problem. As for the policy of the 10,000 baht top-up project through digital wallets, the latest meeting of the Policy Committee agreed to set up a subcommittee to study suggestions and opinions regarding the implementation of the project, with a timeframe of 30 days for consideration.
Krungsri Research is preparing to revise down its economic forecast, expecting growth of below 3% in 2024. The National Economic and Social Development Council (NESDC) reported that the Thai economy expanded by 1.7% in the last quarter of last year, lower than analysts' expectations of 2.6%, and contracted by -0.6% quarter-on-quarter for the first time in a year. This was attributed to a contraction in government spending due to delays in the 2024 budget, a slowdown in tourism revenue due to lower per capita spending despite an increase in foreign tourists, and a contraction in private investment compared to the previous quarter. Meanwhile, private consumption showed no growth compared to the previous quarter.
For the entire year 2566, the Thai economy expanded only 1.9%, slowing down from the 2.5% expansion in 2565. In 2567, NESDB lowered its economic growth forecast to 2.2-3.2% (median value of 2.7%). from the original expectation of 2.7-3.7% (median value of 3.2%)
Krungsri Research forecasts that economic growth this year may improve from last year, driven by the continued expansion of the tourism sector, the accelerating trend of government spending from the second quarter of 2024 after the annual budget act comes into effect, and the expansion of private consumption driven by job creation and support from additional government measures expected in the second half of the year.
However, Krungsri Research is preparing to revise down its economic growth forecast for this year to below 3.0%, from its previous forecast of 3.4%, due to significantly weaker-than-expected GDP figures in the last quarter of last year. This is coupled with negative structural problems that are hindering industrial production and export growth, causing it to lag behind other countries in the region. Furthermore, if these structural problems undermine the cyclical economic recovery and weaken demand momentum, it could increase the likelihood of a policy interest rate cut this year.
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