EIC forecasts Thailand’s economy will grow by 2.5% in 2024.

Photo courtesy of Varuth Hirunyatheb

Thailand is expected to experience soft economic landing next year, according to Siam Commercial Bank’s Economic Intelligence Center (SCB EIC). The research center maintained Thailand’s economic growth forecast for 2024 at 2.5% but lowered its forecast for 2025 to 2.6%, down from previous forecasts of 2.9% to 3%.

EIC Chief Economist Somprawin Manprasert explained that the downward revision reflects the weakening momentum of Thailand’s economic expansion, which is impacted by both structural and cyclical factors in the medium to long term.

Government stimulus measures, including cash payments to vulnerable groups this year, are expected to boost GDP by 0.5 to 0.7 percentage points, the centre said.

As the EIC notes, continuing these aid measures next year could potentially support the country’s economic growth by up to three percentage points.

Even though the government plans to introduce stimulus packages, the economy is already heading towards a soft landing, Somprawin said.

The EIC will monitor the economic policies of the new government and assess the next stage of economic development.

Economic growth

Somprawin stressed that Thailand’s economy could face a hard landing depending on three critical factors: a global economic recession, domestic political instability affecting fiscal budget disbursement, and a tightening in the country’s financial system. In a worst-case scenario, the EIC projects GDP growth of 1.9% in 2025, although the probability of this scenario is less than 50%.

Somprawin noted that Thailand’s high household debt remains a major challenge, putting pressure on longer-term economic growth. This structural problem affects domestic consumption, the manufacturing sector and foreign direct investment, as foreign investors tend to prioritize domestic consumption when investing abroad.

He noted that many of the new government’s current economic policies are a continuation of the previous administration’s strategy, although there is a greater emphasis on supporting struggling households and businesses.

The EIC predicts that short-term stimulus measures will benefit sectors related to consumption, tourism and agriculture. However, industries heavily dependent on low-wage workers could face increased cost pressures, and the energy sector could see revenues fall, according to the center.

On the other hand, policies aimed at improving competitiveness are expected to favor infrastructure-related businesses, industries aligned with global trends, and emerging sectors. Environmental policies will pose both challenges and opportunities, requiring many businesses to adapt.

Structural challenges remain, particularly in the auto industry, which could potentially lose about 40% of its domestic production capacity if manufacturers fail to adapt to changing market preferences, according to research institution Bangkok Post.

The competitiveness of local small and medium-sized enterprises also remains an issue of concern.

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