KResearch holds its 2024 GDP forecast at 2.6%, with stronger growth expected in the latter half. Flooding, global economic slowdown, and the US election merit close watch.

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Mitihoon  –  Mr. Burin Adulwattana, Managing Director and Chief Economist, KASIKORN RESEARCH CENTER Co., Ltd. (KResearch), said, “The Federal Reserve cut its policy rate by 50 basis points in its most recent FOMC meeting, exceeding market expectations. It also signaled an additional 2-percent reduction by 2026, marking the beginning of a downward interest rate cycle. Meanwhile, China’s economy may grow less than the 5-percent target in 2024 due to the persistent real estate crisis, the absence of clear economic stimulus policies from the Chinese government, and trade protectionism from the West. In Europe, Germany’s economy continues to show signs of fragility, and the business sector across the region is facing increased uncertainty amid geopolitical conflicts. The upcoming US presidential election merits close watch as it will impact policies of international trade, investment, and foreign relations.”
Ms. Nattaporn Triratanasirikul, KResearch Deputy Managing Director, noted that global geopolitical issues have created uncertainty for the Thai economy, presenting both opportunities and risks. Opportunity arises from Thailand’s position as a neutral country, while risks stem from the impacts of global trade protectionism and intensified competition. However, if a Trade War 2.0 were to erupt due to the imposition of 60-percent import tariffs on Chinese goods and a 10-20 percent across-the-board levy on all products imported into the US, it would likely trigger another wave of manufacturing relocation away from China. This would primarily affect labor-intensive products that were not previously subject to tariffs under Trade War 1.0. As a result, Thailand may see only limited benefit from this situation.
Ms. Kevalin Wangpichayasuk, KResearch Deputy Managing Director, is of the view that global geopolitical issues will put increasing pressure on Thailand’s industries ahead, particularly manufacturing. For instance, the production of electric vehicles in Thailand may face the risk of overproduction, as relying on exports will be difficult, and the domestic market may not grow as fast as previously anticipated.
Ms. Thanyalak Vatcharachaisurapol, KResearch Deputy Managing Director, added that amid the protracted global geopolitical tensions, along with ongoing political instability worldwide and the downward trend in global interest rates, it is expected that the value of safe-haven assets including gold will continue to increase, as seen from their recent successive record highs. However, investors should be vigilant regarding increased volatility in other assets, particularly after the COVID-19 pandemic. They are therefore advised to remain cautious towards investment and effectively diversify risks.
For the rest of 2024, KResearch maintains its full-year growth forecast for the Thai economy at 2.6 percent, supported by the recovery in exports and tourism, along with the government’s economic stimulus measures. In the second half of 2024, it is expected that the Thai economy’s performance will better that of the first half, driven by the rebound in exports, investment, tourism (high season), and the government’s economic stimulus measures. However, risks stemming from the impacts of flooding, a potential global economic slowdown, and weakening domestic demand may threaten the Thai economy going forward.
In addition, KResearch holds the view that Thailand’s industries will face four major challenges during the rest of this year. These include: 1) flooding, with the impact worsening if severe flooding occurs in the central and southern regions; 2) high volatility of the Baht; 3) competition from foreign-made products; and 4) rising costs, especially due to the minimum wage hike. These four factors would mainly affect the agriculture, manufacturing, and service sectors, particularly SMEs. For full-year 2024, it is expected that the automotive, real estate, and construction sectors will be in the doldrums due to their shrinking income indicators.
Regarding the financial sector, household debt remains a major concern. The household debt-to-GDP ratio is projected to stay close to 90 percent over the next one to three years. This will significantly limit any potential uptick in new loans. Loan growth in the Thai banking system is unlikely to exceed 1.5 percent this year amid borrowers’ reduced ability to access credit. According to a household debt survey conducted in the third quarter of 2024, more than half of respondents with housing loans or auto loans have experienced repayment difficulties, leading them to participate in debt restructuring programs implemented by financial institutions. This problem is linked to low income and minimal savings, making these borrowers more vulnerable than other groups. The survey also found that 8.2 percent of respondents have taken out informal loans and are seeking assistance through debt restructuring, financial planning, and greater access to new, formal loans, in addition to sustainable solutions that focus on debtors’ improved income stability.

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