Thailand’s Economic Growth Outlook

By Rahul Trivedi
BENGALURU (Reuters) – Thailand’s economic growth likely gathered a bit of pace in the second quarter thanks to higher government spending, but a tepid recovery in tourism and high household debt cloud the overall outlook, according to economists polled by Reuters.

Southeast Asia’s second-largest economy was forecast to expand 2.1% in the April-June period, according to the median prediction from an Aug. 8-15 poll, up from 1.5% in the preceding quarter.

On a quarterly basis, gross domestic product (GDP) likely grew a seasonally adjusted 0.9% from 1.1% in the first quarter, according to a smaller sample of forecasts.

Forecasts for the data due on Aug. 19 range from 1.8% to 2.8%.

“For Q2, government spending and investment, which rapidly accelerated, should … drive economic growth. There could be some slowdown in private consumption amid high household debt, as well as in exports of services,” said Poon Panichpibool, a markets strategist with Krung Thai Bank.

“I still have some concerns about potential impacts from a global economic slowdown, especially in the case of (a) U.S. economic recession, which could hamper Thailand’s exports.”

The outlook darkened on Thursday with a court dismissing Prime Minister Srettha after less than a year in power, raising more uncertainties in a country dogged by coups and court rulings that have brought down multiple governments and political parties.

Last month, the World Bank downgraded Thailand’s 2024 GDP growth forecast to 2.4% from 2.8%, citing weaker-than-expected goods exports and public investments.

While exports rose only 0.3% year-on-year in June, they grew 5.8% in April and 7.8% in May.

Apart from weak global demand and a slowdown in China – Thailand’s major trading partner – the vital tourism sector was yet to recover to its pre-pandemic levels.

“The weak outlook for China’s economy will affect Thailand mainly through the tourism sector. A subdued domestic outlook has caused Chinese tourists to cut back on discretionary spending such as holiday expenditures,” said Eugene Tan, associate economist at Moody’s Analytics.

Thailand’s economic growth was expected to average 2.6% for the year, according to a separate Reuters poll taken in July, a significant downgrade from 3.4% predicted at the beginning of the year.