The economy of Thailand is projected to recover in 2024, supported by sustained private consumption as well as a recovery in tourism and goods exports. Growth is expected to accelerate from 1.9 percent in 2023 to 2.4 percent in 2024, and further reach 2.8 percent in 2025, driven by both domestic and external demand. This outlook is bolstered by the revised fiscal budget proposal for fiscal year 2025 and anticipated acceleration in budget execution following significant delays earlier this year.
Private consumption and tourism will be key drivers of this growth, although their pace is expected to slow. Goods exports are projected to rebound due to favorable global trade conditions, with tourism returning to pre-pandemic levels by mid-2025 despite setbacks from the Chinese economy.
Headline inflation is projected to slow to a regional low of 0.7 percent in 2024, below the central bank’s target range, due to moderation in food and energy prices. Public debt is projected to rise to 64.6 percent of GDP in fiscal year 2025, while the fiscal deficit is expected to increase to 3.6 percent of GDP as budget execution normalizes and fiscal stimulus measures aimed at boosting consumption are implemented.
Thailand faces the challenge of reconciling fiscal sustainability with short-term stimulus needs. To enhance fiscal resilience amid rising spending requirements, it can focus on more targeted social assistance and transfers for vulnerable households and poverty alleviation. Additionally, there is room for raising tax revenue, promoting equity, creating fiscal space, and accelerating investment.
A section of the report titled "Unlocking the Growth Potential of Secondary Cities" highlights that secondary cities have long-term potential to enhance Thailand's productivity, spur economic growth, and bolster global competitiveness.
Thailand’s urbanization has been heavily focused on Bangkok which acts as a growth engine for the country with a population size significantly larger than other cities like Chiang Mai or Chon Buri. Bangkok’s strategic geographic position within Southeast Asia coupled with its developed infrastructure has fostered economic activities within the city.
However, Bangkok's primacy also brings challenges such as congestion and vulnerabilities highlighted during events like the 2011 floods which underscored Thailand's economic vulnerability due to concentration of critical industries within Bangkok. Climate change further strains Bangkok's infrastructure emphasizing need for diversified economic base.
Bangkok's economy shows signs of stagnation with GDP growth roughly equalizing population growth suggesting maturity potentially leading towards saturation without improvement in productivity.
Conversely per capita GDP growth rates in secondary cities have been nearly fifteen times higher than those seen within Bangkok indicating improved productivity efficiency alongside enhanced economic potential across these regions acting pivotal roles towards regional development serving local government industry satellite regions around Bangkok or key trade corridors helping reduce strain upon capital providing alternative business locations fostering job creation diversification balanced spatial development nationwide.
Challenges remain notably over-dependence nationally raised revenues impeding realization full potential greater local authority urban planning infrastructure development access long-term financing mechanisms robust fiscal instruments property taxes income tax piggybacking user charges could enable effective charting independent economic trajectories across secondary cities driving national prosperity forward collectively.