Thailand’s economy grew by 3.0% year-on-year in the third quarter of 2024, marking its fastest growth in two years. This performance exceeded analysts’ expectations, which had predicted a median growth of 2.6% based on a Reuters survey. Seasonally adjusted, the quarter-on-quarter growth rate reached 1.2%, the highest in 18 months, indicating a strong rebound from the sluggish second quarter.
Key Drivers of Economic Recovery
The recovery was largely driven by:
- Tourism: Thailand expects to welcome 36 million foreign tourists this year, generating an estimated $51.5 billion in tourism revenue, which is a major growth engine for the economy.
- Government Spending: Increased government expenditure and investment activities have also played a significant role in supporting the economy.
As a result, the National Economic and Social Development Council (NESDC) forecasts Thailand’s GDP growth for 2024 at 2.6%, aligning with the previously predicted range of 2.3%-2.8%. For 2025, growth is expected to range between 2.3%-3.3%.
Challenges Amid Recovery
Despite the strong third-quarter performance, Thailand’s economy faces persistent challenges, particularly:
- Domestic Consumption: High household debt and borrowing costs continue to restrain consumer spending.
In response, Finance Minister Pichai Chunhavajira has announced that the government is considering new stimulus measures, including the second phase of the Digital Wallet Program, aimed at boosting consumer spending to stimulate economic activity.
Structural Issues and Long-Term Growth
While the latest data points to a recovery, analysts stress that Thailand needs to address structural issues for long-term sustainable growth. These include:
- Reducing household debt.
- Economic diversification to reduce reliance on external demand.
As global economic uncertainties and regional competition intensify, Thailand is at a pivotal moment. The government’s ability to implement targeted policies will be crucial in stabilizing the economic foundation and ensuring that recent growth momentum translates into long-term resilience, which will play a critical role in strengthening Thailand’s position in the region’s future competitive landscape.
