Thailands Fourth Quarter GDP Growth Falls Short Amid Global Trade Concerns
Thailand's economy expanded by 3.2% in the fourth quarter of 2024, a figure that, while marking the strongest annual growth in nine quarters, fell short of the anticipated 3.9%. On a quarterly basis, the economy grew by a seasonally adjusted 0.4%, below the forecasted 0.7% and the previous quarter's 1.2% expansion.
The National Economic and Social Development Council (NESDC) attributes this modest growth to several factors, including high household debt, elevated borrowing costs, and sluggish demand from key markets such as China. These challenges have collectively hindered Thailand's economic momentum, causing concerns among policymakers and investors.
Adding to these domestic challenges are external threats, notably potential U.S. trade policies under President Donald Trump. The NESDC has expressed apprehension that Thailand's trade surplus with the United States could make it a target for tariffs, which would adversely affect Thai exports. This concern is underscored by recent market reactions; following the release of the GDP data, Thailand's main stock index dropped to a four-year low, and the baht depreciated against the U.S. dollar.
Despite these hurdles, the NESDC has maintained its 2025 growth forecast at a range of 2.3% to 3.3%. The council is optimistic that government initiatives, such as the "digital wallet" stimulus scheme and measures to support industries like automotive and real estate, will bolster economic activity. Additionally, the NESDC projects that 38 million foreign tourists will visit Thailand this year, providing a significant boost to the tourism sector.
In response to the current economic landscape, the Bank of Thailand has opted to keep its main interest rate steady at 2.25%, following a surprise quarter-point cut in October. This decision reflects a cautious approach, balancing the need to support economic growth while managing inflation and financial stability.
As Thailand navigates these complex economic challenges, the interplay of domestic policies and international trade relations will be critical in shaping the nation's economic trajectory in the coming year.
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