Business leaders have expressed cautious optimism for Thailand to exhibit moderate growth from 2024-25, driven by tourism, monetary easing, and government support. 

Nonetheless, they remain cautious about headwinds stemming from high household debt, the recent minimum wage hike, and limited credit access for smaller businesses, calling on the government to provide further stimulus measures.

CEO poll expecting 2-3% growth in 2024-25

The Research Department of the Stock Exchange of Thailand (SET) recently collaborated with the Thai Listed Companies Association to capture business sentiment among the CEOs of 249 SET-listed companies. As much as 63% of respondents say the Thai economy is expected to grow by 2-3% in 2024 and 2025. 

They pointed to tailwinds such as the recovery of the tourism sector, government stimulus measures, and budget disbursements. Many also expected global trends, such as generative artificial intelligence (GenAI) and sustainability adaptation as contributors to the Thai economy.

Nonetheless, many respondents also pointed to risks including high household debt, weaker domestic purchasing power, rising labor costs, and geopolitical instability. Up to 64% of CEOs indicated slowing sales, while 55% pointed to trade debt payments.

Ultimately, investment sentiment remains strong. Three-fourths of CEOs in the survey indicated that they were interested in investing and expanding operations over the next 12 months, with 69% looking at the ASEAN region, 12% in China, and 10% in India.

Thai central bank relents on monetary easing

The poll comes after the Bank of Thailand’s October 16th, 2024 decision to lower the policy interest rate by 0.25%, from 2.50% to 2.25% per annum. The central bank’s Monetary Policy Committee had voted 5-2 in favor of the adjustment to support the export and tourism sectors.

Welcoming the move, Sanan Angubolkul, Chairman of the Thai Chamber of Commerce, remarked that a stable Thai baht is essential to enhancing the competitiveness of the country’s exports, which have been affected by an appreciating currency and geopolitical unrest hitting shipping lanes.

Earlier this year, the Thai baht’s sharp rise from 36.8 to 32.3 THB per USD represented a 12% increase. Without urgent course correction, the baht’s appreciation was projected to result in 250 billion baht in export revenue losses.

“Lowering the policy rate would create a positive image for the Thai economy, as well as relieve pressure faced by several businesses, especially exporters who have been suffering from increased costs due to the baht appreciation, global oil prices, and other geopolitical factors,” said Dr. Chaicharn Charoensuk, President of the Thai National Shippers’ Council.

However, he noted that further actions may be necessary depending on external factors, such as U.S. monetary policy. Particularly at risk are agricultural and agro-industrial exports, which took a beating due to tropical storms that devastated the upper regions of Thailand.

Following the central bank’s policy rate reduction, Thai commercial banks also announced a 0.25% cut in lending rates. These measures are expected to take some of the burden off of small and medium-sized enterprises (SMEs), providing over 1.3 billion baht in debt repayment relief in the last quarter of 2024.

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