Rate adjustment anticipated within the first half of 2025
PUBLISHED : 19 Feb 2025 at 06:03
Thailand’s GDP growth for the fourth quarter of 2024 has fallen below expectations, prompting economists to predict a potential cut in the Bank of Thailand’s policy rate during the first half of 2025. The country’s growth outlook has been further complicated by the threat of US tariffs, which could significantly impact economic performance this year.
Despite a strong export sector, a resurgence in tourism, and government stimulus measures, consumer spending has stagnated, adversely affecting auto and housing purchases. As a result, Thailand’s GDP recorded an average growth of only 2.5% for 2024, missing the anticipated 2.7% target.
The National Economic and Social Development Council has maintained its growth forecast for 2025 within a range of 2.3% to 3.3%, with a midpoint projection of 2.8%. Financial analysts remain cautious, highlighting risks that may hinder economic recovery.
Investment banking analysts noted that despite the strong pace of GDP growth in the last quarter of 2024, overall growth for the year fell short of targets, indicating a need for the Bank of Thailand to respond to these developments.
Projected GDP growth for Thailand in 2025 is currently set at 3%, bolstered by extensive fiscal support. However, economic slowdowns in major markets such as the US and China may challenge the sustainability of Thai exports moving forward.
With recent economic data illustrating a slowdown, many experts believe the Bank of Thailand is increasingly likely to implement policy rate cuts to stimulate investment. Predictions suggest a 25-basis-point cut at the next meeting, followed by an additional reduction before the end of the year.
Concerns surrounding US tariffs continue to loom, as the weighted average of applied tariffs on Thai goods could impact critical sectors, such as electronics and machinery, which account for a significant portion of Thailand’s exports to the US. Analysts stress that adaptive policy measures are essential to address the anticipated challenges and support growth in the upcoming quarters.
