An International Monetary Fund (IMF) staff team, led by Corinne Deléchat, has completed the 2024 Article IV Consultation with Thailand. The discussions took place from November 11 to November 26, 2024. At the end of these discussions, Ms. Deléchat released a statement addressing Thailand's economic situation and future outlook.
According to Ms. Deléchat, "Thailand’s economy continues to recover gradually." Economic activity saw modest growth of 1.9% in 2023 and expanded by 2.3% in the first three quarters of 2024. This growth was primarily driven by private consumption and a resurgence in tourism-related activities, with international tourist arrivals reaching about 90% of pre-pandemic levels.
The statement highlighted that public consumption increased by only 1.6%, while public investment contracted by -2.3% due to delayed budget approval and slower-than-expected implementation.
Looking forward, the IMF projects that Thailand's cyclical recovery will persist with growth anticipated at 2.7% in 2024 and expected to accelerate moderately to 2.9% in 2025. These projections are based on planned fiscal stimulus measures and an increase in public investment under the FY2025 budget.
Ms. Deléchat noted that "Staff’s projections are subject to emerging risks," citing potential global trade tensions, commodity price volatility, and domestic private sector debt issues as factors that could impact Thailand's economic recovery.
In terms of policy recommendations, the mission suggests a shift towards rebuilding policy space as economic slack narrows. The recommendation includes adopting a less expansionary fiscal stance than currently envisaged under the budget or reallocating planned cash transfers toward productivity-enhancing investments or social protection reforms.
The IMF mission welcomed the Bank of Thailand's decision to cut its policy rate by 25 basis points in October but advised readiness for further adjustments based on data and outlook changes.
Addressing household debt overhang remains crucial according to Ms. Deléchat: "Addressing the persistent household debt overhang requires a resolute, well-coordinated and comprehensive approach."
Furthermore, structural reforms were emphasized as necessary for reversing downward trends in potential growth through measures such as enhancing competition, digitalization efforts, labor force upskilling, service sector liberalization, governance strengthening, infrastructure upgrading, and social protection enhancement.
The IMF team engaged with various officials from government bodies including the Bank of Thailand along with representatives from civil society and private sectors during their mission visit to Bangkok.
The IMF Executive Board is tentatively scheduled to discuss this Staff Report in February 2025.