Thai Q1 economic growth likely muted as exports, demand falter – Reuters poll

By Thomson Reuters May 15, 2024 | 8:08 PM

By Anant Chandak

BENGALURU (Reuters) – Growth in Thailand’s economy was likely subdued in the quarter through March despite solid tourist arrivals, hampered by weak exports and domestic demand, a Reuters poll of economists found.

High household debt and borrowing costs hurt private consumption and customs-based exports fell in March for the first time since July 2023, dragging growth amid a slowdown in key trading partner China.

Even though around 12 million tourists arrived in the quarter, putting the country on track to exceed its 40 million target for 2024, it was not enough to offset a decline in other sectors like manufacturing.

Still, the government plans to implement a “digital wallet” stimulus policy this year – a cash handout to eligible adults – which is expected to boost the economy.

Thailand’s economy likely grew 0.8% in the January-March quarter from a year ago, slower than 1.7% in the previous quarter, the median forecast from 19 economists polled May 10-15 showed.

Despite likely avoiding a technical recession in Q1, quarter-on-quarter GDP growth was still expected to be soft at 0.6% from -0.6% in Q4. Forecasts ranged from -0.3 to 1.3%.

“What we’re seeing now is the exhaustion of the post-pandemic release of pent-up consumer demand, which was always going to take place and in a fairly dramatic way, given the structurally high level of household debt in Thailand,” said Miguel Chanco, chief emerging Asia economist at Pantheon.

“Thailand needs to catch up with the likes of Vietnam, who in recent years has aggressively pursued and succeeded in securing major free trade agreements with global economic giants.”

Last month, Prime Minister Srettha Thavisin urged the Bank of Thailand to cut rates to support the economy but central bank officials pushed back saying current rates didn’t hinder growth.

“The government must stop intervening with the (Bank of Thailand) and work closely together to solve prolonged structural problems. They should change the digital wallet to be a much more focused measure to help those in need,” said Poon Panichpibool of Krung Thai Bank.

“Risks to growth could arise from a delayed disbursement of the fiscal budget as well as external factors like a global economic slowdown or a worse-than-expected Chinese economic recovery.”

The government sees 2.4% growth this year but said it could reach 3.3% if a stimulus plan is launched in the fourth quarter. An April Reuters poll put growth at 2.8% this year.

(Reporting by Anant Chandak and Susobhan Sarkar; Polling by Veronica Khongwir and Susobhan Sarkar; Editing by Jonathan Cable and Bernadette Baum)