Thai finance ministry raises 2025 growth forecast to 2.2%

Thailand's finance ministry has slightly raised its 2024 GDP growth forecast to 2.2% from 2.1% and significantly upgraded its export growth projection to 5.5% from 2.3%, despite lowering foreign tourist arrival expectations to 34.5 million from 36.5 million. This improved outlook, driven by stronger exports, provides an updated economic trajectory for Southeast Asia's second-largest economy. The country's economy expanded 2.5% in 2023, lagging regional peers.

Analysis

Thailand's Ministry of Finance has issued a revised economic outlook for 2024, signaling a modest improvement driven by a significant shift in growth drivers. The GDP growth forecast was marginally increased to 2.2% from 2.1%. The primary catalyst for this upgrade is a substantial upward revision in the export growth projection, now anticipated at 5.5%, more than double the previous forecast of 2.3%. This indicates strengthening external demand for Thai goods. However, this positive development is partially offset by a weaker outlook for the crucial tourism sector, with expected foreign arrivals lowered to 34.5 million from 36.5 million. It is important to contextualize this outlook by noting that the projected 2.2% growth for 2024 still trails the 2.5% expansion recorded in 2023, a year in which Thailand's economy was already described as lagging its regional peers.

Key Decisions for Investors

• Investors should consider re-evaluating sector-specific exposure within Thailand, potentially favoring export-oriented industries over those heavily reliant on tourism, given the diverging forecasts for these key economic drivers.
• Monitor upcoming central bank communications, as the combination of stronger export data and softer tourism figures presents a complex scenario for future monetary policy decisions.
• Despite the upward revision, the overall GDP growth forecast of 2.2% remains modest and lags regional peers, suggesting a cautious approach to increasing broad Thai equity allocations until signs of more robust, broad-based growth emerge.