Thailand Monthly Thailand Economic MonitorEconomic Monthly Monitor 18 March 2025 Thailand’s economy grew by 3.2 percent year-on-year in Q4 2024, driven by a rebound in public investment and strong electronics exports, while private consumption saw a modest boost from fiscal stimulus. High-frequency indicators in January suggest continued expansion, supported by strong goods exports, improving investment, and a tourism rebound despite global trade uncertainty. The Bank of Thailand lowered the policy rate to 2.0 percent in February to ease debt pressures, while inflation remained within target. Despite a stronger current account balance, financial markets fluctuated, with the Thai baht depreciating in early March on general US dollar strength. The latest GDP release showed that growth picked up at 3.2 Figure 1: The economic recovery remained slow relative to ASEAN peers percent year-on-year in 2024 Q4. Public investment returned (Index, Q4 2019 = 100) to the fore as a growth driver following several quarters of 130 Indonesia Malaysia delayed budget execution amid the political transition. Goods 120 Philippines Thailand exports benefited from the electronics upcycle. Private Vietnam consumption accelerated marginally as the fiscal stimulus 110 through THB 10,000 transfers helped offset the effects of 100 tightened credit and high household debt. However, 90 manufacturing remained flat and private investment contracted (-2.1 percent year-on-year). Overall, growth in 2024 reached 2.5 80 percent, up from 2.0 percent previously. Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-24 Source: CEIC; World Bank staff calculations. In January, high-frequency indicators suggest firming domestic demand. Private consumption accelerated slightly, Figure 2: Exports and services remained solid while supported by the THB 10,000 cash transfers to 14.5 million State manufacturing contracted and consumption softened (Percent, year-on-year) Welfare Card holders, which helped offset the impact of 25 Manufacturing Production Index tightened credit and high household debt. An additional cash 20 Service Production Index Private Consumption Index transfer to elderly citizens aged 60 and above in late January is 15 Goods Exports expected to further boost consumption. Investment also showed 10 signs of recovery, with private investment growth remaining 5 0 positive for the second consecutive month after contracting for -5 most of 2024, alongside improved public investment budget -10 execution. (Fig. 4). -15 Jan-22 Jan-23 Jan-24 Jan-25 On the external front, goods and services exports improved. Source: Haver Analytics; CEIC; World Bank staff calculations. Tourist arrivals rose by 22 percent year-on-year, reaching 99.7 Figure 3: Tourism recovery continued to support percent of pre-pandemic levels (Fig. 2). Most tourist arrivals from growth major sources have surpassed pre-pandemic levels, while (Tourist arrivals, percent of the 2019 level) arrivals from China, despite growing 30 percent year-on-year, 150 Total China remained 62 percent below pre-pandemic levels (Fig. 3). 100 Goods export growth improved due to accelerated exports 50 ahead of rising global trade uncertainties and solid demand for electronics. Goods exports expanded by 12.9 percent year- 0 on-year in January, the highest in three months, driven by solid Jul-22 Oct-22 Jul-23 Oct-23 Jul-24 Oct-24 Apr-22 Apr-23 Apr-24 Jan-22 Jan-23 Jan-24 Jan-25 growth in manufacturing exports. The improvement was supported by accelerated exports to the US and China ahead of Source: CEIC; World Bank staff calculations. rising global trade uncertainties, along with strong external THAILAND MONTHLY ECONOMIC MONITOR | 1 demand for electronics. Electronics exports continued to grow Figure 4: Public investment budget execution rate robustly, in line with trends seen in other major Asian exporters. improved from the previous Fiscal Year (Percent of Budget) (Fig. 5). In contrast, exports of automobiles continued to contract 100 2023 sharply. 2024 Average of 2021-2023 Going forward, global trade policy uncertainty presents a 2025 significant risk due to Thailand’s high trade openness and 50 deep integration in global value chains. While Thailand has strategically positioned itself to benefit from the relocation of global supply chains, it remains vulnerable to shifts in global 0 economic activity. A slowdown in the US, China, or EU Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Source: CEIC; World Bank staff calculations. economies could lead to weaker demand for Thai exports, dampening growth prospects. Additionally, the influx of low- Figure 5: Exports of electrical and electronic products priced consumer and intermediate goods from China, while continued to expand (Percent, 3mma, year-on-year) beneficial to consumers, intensifies domestic competition for Thai manufacturers. 60 China Malaysia Singapore Taiwan 40 South Korea Thailand The Bank of Thailand (BOT) lowered the policy rate to 2.0 percent, anticipating inflation to remain well anchored at the 20 lower bound. In January, headline inflation edged up from 1.2 0 percent to 1.3 percent, marking the fifth consecutive month of -20 increase, surpassing Indonesia and China and returning to the central bank’s target range (1-3 percent) due to the stimulus and -40 reduction in fuel subsidy. In February, the inflation declined slightly, reaching 1.1 percent as the global oil prices declined. Source: CEIC; World Bank staff calculations. Given anchored inflation expectations, the Bank of Thailand (BOT) lowered the policy rate to 2.0 percent February to alleviate Figure 6: THB NEER depreciated on general US dollar strength household debt-servicing pressure amid recent tightening credit (Index January 2021=100) standards. 110 IDR MYR PHP THB Thai baht depreciated on general US dollar strength. In the 105 first week of March, the Thai baht NEER depreciated by 0.9 percent, similar to other major ASEAN currencies (Fig. 6). 100 Despite of an improved current account surplus, the baht depreciated, following the US imposition of 25 percent tariffs on 95 imports from Mexico and Canada, as well as 20 percent tariffs on Chinese goods, prompting immediate retaliatory measures 90 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25 from these countries (Fig. 7). The financial markets experienced Note: Average of the first 7 days for March heightened volatility due to rising global trade uncertainty. The Source: CEIC; World Bank staff calculations. Thai Stock Market Index fell for the fourth consecutive month by Figure 7: The current account surplus has been 8.4 percent to 1,204—its lowest level since the 2020 pandemic— supported by improved tourism revenue amid global uncertainty and a sluggish economic recovery. (USD million) Foreign portfolio investment registered outflows for the fifth BOP: USD: Trade Balance BOP: USD: Services, Primary Income & Secondary Income consecutive month, totaling THB 5.1 billion, primarily from equity BOP: USD: Current Account Balance markets, while the government bond market saw net inflows. 5000 2500 0 -2500 -5000 Jan-22 Jan-23 Jan-24 Jan-25 Source: CEIC; World Bank staff calculations. THAILAND MONTHLY ECONOMIC MONITOR | 2 News Highlights: Issues to Watch: • Bank of Thailand cuts interest rate to 2 percent (Bangkok • Trade: How will the potential trade policy changes in the Post, Link). US affect the Thai economy? • Thai Q4 GDP growth misses forecast (Reuters, Link). • Inflation: Will the recent fiscal stimulus put upward • Thailand's government plans to set up a long-term pressure on inflation? • Fiscal: Will the government rollout the remaining THB equity fund to support the Thai stock market (Reuters, 10,000 cash handout? Link). Prepared by Warunthorn Puthong (Economist). For further questions, please email wputhong@worldbank.org THAILAND MONTHLY ECONOMIC MONITOR | 3 Selected Economic and Financial Indicators 2024 2024 2025 2024 Q1 Q2 Q3 Q4 Oct Nov Dec Jan Feb GDP and Inflation (%YoY) GDP growth (real) 2.5 1.7 2.3 3.0 3.2 Contribution to GDP growth: Private consumption 2.6 3.6 2.8 2.1 1.9 General Government consumption 0.4 -0.3 0.1 1.0 0.8 Gross fixed capital formulation: Private -0.3 0.8 -1.2 -0.5 -0.4 Gross fixed capital formulation: Public 0.3 -1.9 -0.3 1.8 1.6 Net Exports of goods and services 1.3 -0.8 3.4 0.2 2.4 Change in Inventory 0.0 -0.1 -2.6 -1.7 -2.7 Residual and errors -1.7 0.4 0.0 0.1 -0.4 GDP, nominal (USD Billion) 527 130 123 133 142 GDP, nominal (THB Billion) 18579 4,623 4,521 4,616 4,819 Consumer Prices Index: Headline 0.4 -0.8 0.8 1.0 1.0 0.8 1.0 1.2 1.3 1.1 Consumer Prices Index: Core 0.6 0.5 0.4 0.4 0.8 0.8 0.8 0.8 0.8 1.0 Output Indicators Manufacturing Production Index (%YoY) -1.2 -2.8 0.3 -0.8 -1.7 -0.1 -3.3 -1.8 -0.9 Capacity Utilisation (%) 58.4 60.4 57.7 58.3 57.3 58.0 57.9 56.0 0.0 Farm Production Index (%YoY) -1.3 -3.4 -1.3 -1.0 0.7 -2.5 1.6 2.9 3.8 Service Index (%YoY) 8.3 5.6 7.8 10.6 9.0 8.9 10.0 8.2 6.8 Labor Market Unemployed workers (Thousand Persons) 402.2 407.7 429.1 413.9 358.2 Unemployment rate (%) 1.0 1.0 1.1 1.0 0.9 Underemployment/1 (Thousand Persons) 192.4 191.5 162.4 191.9 223.6 Underemployment (%) 0.5 0.5 0.4 0.5 0.6 Balance of Payments (USD million) Current account 12,347 3,407 1,120 2,202 5,618 659 2,034 2,925 2,657 Current account (% of GDP) 2.3 2.6 0.9 1.7 4.0 1.5 4.6 6.7 6.0 Trade Balance 19,274 2,495 5,655 5,773 5,351 1,446 2,023 1,882 404 Exports of goods (%YoY) 23 -0.5 4.3 8.9 10.6 14.2 9.1 8.4 12.9 Imports of goods (%YoY) 25 2.6 0.8 11.3 10.7 17.1 2.3 13.4 7.5 Service, primary and secondary Income -6,926 912 -4,535 -3,571 267 -787 11 1,043 2,253 Tourist Arrivals (Thousand Persons) 35,546 9,370 8,131 8,588 9,457 2,679 3,150 3,627 3,709 Financial account -7,956 -5097.2 -2380.2 -479.1 - Financial account (% of GDP) -1.5 -3.9 -1.9 -0.4 - Foreign direct Investment, net 94 1,301 -854 -353 - Portfolio flows -9,404 -4,494 -3,052 -1,858 - Others Investments 2,167 -1,779 1,661 2,285 - Central Government Budget (Fiscal Year, THB billion)/2 Revenue 3,430 698 953 1,019 760 253 230 276 270 Expenditure 4,008 737 1,023 1,069 1,179 492 306 381 338 Central Government balance -578 -39 -70 -50 -419 -239 -76 -105 -67 Central Government balance (% of GDP) -3.1 -0.8 -1.6 -1.1 -8.7 Public debt (% of GDP) 63.2 63.56 63.28 63.2 63.76 63.86 64.26 63.76 64.13 Financial Markets Indicators Policy rate (%) 2.25 2.50 2.50 2.50 2.25 2.25 2.25 2.25 2.25 2.00 M2 (%YoY) 2.30 1.7 2.4 2.3 2.7 3.0 2.7 2.4 2.8 - Household Debt (% of GDP) - 90.8 89.8 89.0 SET Index 1,400 1,378 1,301 1,449 1400 1,466 1,428 1,400 1,315 1,204 Thai government bond yield, 10 year (%) 2.25 2.50 2.66 2.47 2.25 2.41 2.29 2.25 2.30 2.17 Foreign exchange reserve and FX forward position (USD billion) 262 253 253 269 262 264 264 262 266 268 USD/THB, end of period 33.99 36.47 36.85 32.29 34.0 33.75 34.29 33.99 33.65 34.08 THB NEER, average 121.0 118.8 117.2 121.8 126.3 126.7 125.0 127.1 127.7 128.3 1/ Underemployment accounts for workers who are occupied less than 35 hours per week and are available for additional work (defined by BOT). 2/ Fiscal Year 2025 begins in October 2024 and ends in September 2025, Fiscal Balance according to GFS. Source: Office of the National Economic and Social Development Council, Bank of Thailand, Office of Industrial Economics, Ministry of Industry National Statistical Office of Thailand, Fiscal Policy Office, Public Debt Management Office, Haver Analytics. THAILAND MONTHLY ECONOMIC MONITOR | 4