Thai business group raises 2025 GDP growth forecast to between 1.8% and 2.2%

Thailand's 2024 GDP growth forecast has been upgraded to 1.8%-2.2% from 1.5%-2.0%, primarily driven by a significantly improved export outlook now projected at 2%-3% growth. This positive revision by the Joint Standing Committee on Commerce, Industry and Banking follows the U.S. lowering its tariff rate on Thai imports to 19% from an earlier 36%, a critical development for the export-dependent economy that underperformed regional peers last year.

Analysis

Thailand's economic outlook for 2024 has been upgraded, signaling a positive shift for the export-dependent economy. The Joint Standing Committee on Commerce, Industry and Banking has revised its GDP growth forecast upwards to a range of 1.8% to 2.2%, from a previous estimate of 1.5% to 2.0%. This revision is directly attributed to a significant improvement in the export forecast, which is now projected to grow between 2% and 3%, a sharp reversal from the prior forecast of a 0.5% contraction to 0.3% growth. The primary catalyst for this optimism is the United States' decision to lower its tariff rate on Thai imports to 19%, a substantial reduction from the 36% rate announced earlier. This development is particularly crucial given that exports are a key driver of Thai growth and that the economy's 2.5% expansion last year lagged behind regional peers.

Key Decisions for Investors

• The upgraded GDP and export forecasts, driven by favorable U.S. trade policy, strengthen the investment case for Thai assets; investors may consider increasing exposure to the Thai equity market or the Baht.
• Focus should be placed on Thai export-oriented sectors that are major suppliers to the U.S., as they are positioned to be the primary beneficiaries of the reduced 19% tariff rate.
• Monitor upcoming Thai trade balance and GDP data to confirm that this forecast improvement translates into actual economic performance, especially given the context of last year's relative underperformance.