by Daryl Lum | 14 May 2024 | Bangkok Property Market Updates, Investment Analysis
Thailand’s GDP is now projected to grow between 2.2% and 2.7% this year, a reduction from the earlier forecast of 2.8% to 3.3%, due to a sluggish export recovery, according to a prominent joint business group on Wednesday.
Exports, a crucial component of Thailand’s economy, are now expected to rise by 0.5% to 1.5% this year, down from the previously anticipated 2% to 3% increase, reported the Joint Standing Committee on Commerce, Industry and Banking, which represents these sectors.
Commerce ministry data revealed that in the first quarter of 2024, exports decreased by 0.2% year-on-year.
Last year, Southeast Asia’s second-largest economy expanded by 1.9%, which was below the 2.5% growth recorded in 2022 and behind other regional economies. The country is grappling with high household debt, increased borrowing costs, and the impact of China’s economic slowdown.
Last week, the finance ministry lowered its 2024 growth forecast to 2.4% from 2.8%, although it noted that growth could reach 3.3% if the government’s 500 billion baht (USD 13.5 billion) household stimulus plan is implemented in the fourth quarter as planned.
The tourism sector, another vital growth driver, is expected to attract 35 million foreign visitors this year, consistent with the previous forecast, the business group stated.
“Tourism is a factor that is clearly recovering,” Kriengkrai Theinnukul, chair of the Federation of Thai Industries, said during a media briefing.
The government aims to achieve a record 40 million foreign visitors this year. From January 1 to May 5, Thailand welcomed approximately 12.6 million foreign visitors, a 39% increase year-on-year, with about 2.5 million Chinese tourists, according to government data.
The business group expressed concerns that a proposed minimum wage hike could negatively impact the economy and investment. They plan to send a letter to the labor ministry requesting reconsideration of this move.
Prime Minister Srettha Thavisin has defended his proposal for a nationwide daily minimum wage of 400 baht (USD 10.8), arguing that it is essential for boosting growth, despite concerns from business groups about the potential rise in wage costs.
by Daryl Lum | 14 May 2024 | Bangkok Property Market Updates, Investment Analysis
Thailand’s economy is facing a “critical situation” that necessitates urgent stimulus measures and a potential rate cut, according to officials from the prime minister’s office on Monday (Mar 4). The country is striving to attract new investments from companies like EV maker Tesla.
Prime Minister Srettha Thavisin, who assumed office last August, is committed to revitalizing Southeast Asia’s second-largest economy, which has been hampered by weak exports and a slower recovery from the pandemic compared to its regional counterparts.
“Our data indicates we are not in good shape,” stated Prommin Lertsuridej, the prime minister’s chief of staff, highlighting issues such as low industrial capacity utilization and rising household debt.
Unexpected economic contraction in the fourth quarter of 2023 and a downgraded growth outlook for this year have intensified pressure on the central bank to heed the prime minister’s frequent calls for an interest rate cut.
Prommin, an experienced political strategist, noted that there is room for rate reductions, which would alleviate the financial burden on households by increasing their disposable income. However, he emphasized that the government would not interfere with the central bank’s decision-making process.
Srettha aims to position Thailand as a regional hub for various sectors, including electric vehicles (EVs), aviation, finance, and the digital economy. He has also urged lawmakers to enhance Thailand’s status in food, wellness, and tourism.
“We are taking all possible measures,” Prommin said, referring to initiatives like visa-free tourism, policies addressing household debt, and support for the vital agriculture sector.
A key election promise to distribute 10,000 Thai baht (USD 279) to 50 million Thais for local community spending is in the works, with implementation expected by late May, he added.
Critics have expressed concerns that the government’s numerous measures, especially the USD 14 billion “digital wallet” handout scheme, may not be fiscally sustainable and could fuel inflation.
Negotiations with Tesla
Thailand is in ongoing discussions with Tesla about potential investments in the country, an official from the prime minister’s office confirmed.
The government has proposed offering Tesla access to 100 percent clean energy for a facility in Thailand that could include EV and battery production.
“The decision now lies with Tesla,” stated Supakorn Congsomjit, without providing additional details.
Late last year, Tesla explored potential locations in Thailand, he added.
Traditionally dominated by Japanese automakers like Toyota and Honda, Thailand has recently attracted significant investments from Chinese EV manufacturers, including BYD and Great Wall Motor, totaling more than USD 1.44 billion.
To attract more foreign investment, Prommin said the government is working on several initiatives, including easing visa regulations, amending laws to improve business operations, and upgrading both physical and digital infrastructure.
by Daryl Lum | 14 May 2024 | Bangkok Property Market Updates, Investment Analysis
In the third quarter, Thailand’s economy expanded at its slowest rate in nearly a year, with experts predicting this sluggish trend will persist.
Official data released on Monday revealed that Thailand’s GDP increased by 1.5% year-on-year for the quarter ending in September. This figure fell short of the 2.4% forecast by economists surveyed by Reuters and was lower than the 1.8% growth recorded in the second quarter.
This marks the second consecutive quarter of slowing economic growth in Thailand.
“Public spending, inventories, and goods exports declined, despite strong private consumption and tourism,” noted Chua Han Teng, an economist at DBS Bank, highlighting that public spending capacity is diminishing due to populist policies.
Following a period of political stalemate and market volatility, Srettha Thavisin was appointed Thailand’s prime minister in late September. Economists foresee long-term economic recovery to be challenging under his leadership.
“The back-to-back quarters of weak GDP growth from the production side indicate an economy that is weaker than market sentiment suggests, despite strong consumption,” analysts at Bank of America Global Research stated in a report.
They also anticipated a more significant impact from tighter monetary policies moving forward.
In its September policy meeting, the Bank of Thailand raised its key interest rate for the eighth consecutive time, expecting economic growth and inflationary pressures to rise next year.
However, analysts at Nomura predict the Thai central bank will pause rate hikes at its upcoming meeting on November 29 and throughout 2024.
“We still see a risk of rate cuts as early as Q2 2024,” Nomura stated. “Importantly, the weak Q3 GDP results will likely strengthen the government’s push for a substantial digital wallet handout, despite uncertainties regarding its financing.”
A prolonged pause or potential rate cuts by the Bank of Thailand could also negatively impact the Thai baht, which has depreciated by 1.3% against the dollar this year and is on track for its fourth consecutive annual decline.
