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Thailand’s Gross Domestic Product (GDP) is set to grow by a mere 2.5% during 2024 amid various growth constraints that are both domestic and international, the National Economic & Social Development Council (NESDC) announced.
NESDC, the government thinktank, said that during the 2nd quarter the country’s GDP grew by a 2.3% year-on-year, against the 1.5% growth the country had seen during the 1st quarter of 2024.
The growth was above market expectations of 2.1% that was done by Reuters.
Danucha Picyayanan, the secretary general of NESDC said that most of the economic indicators saw positive momentum be it the household consumption that grew by 4%, the government expenditure that rose by 0.3%, the export sector rose by 1.9% and service sector saw a 19.8% year-on-year growth.
The downer in the data was the investment, especially the private investment that saw a 6.8% decline and the government investment that saw a 4.3% dip. Other areas were the agricultural sector that saw a dip of 1.2% and construction that saw 5.5% decline.
Danucha said that quarter-on-quarter the GDP grew by 0.8% and during the 6-months ending June 2024 the country’s GDP grew by 1.9%. The GDP data for Q1 2024 was revised to a growth of 1.6% from the previous announcement of 1.5%.
During the 2nd quarter, NESDC said that consumption saw a 4% increase during the quarter against 6.9% seen in Q1 2024, while exports grew by 1.9% against a -2.0% seen during Q1 2024 with electronic, computer parts etc. being the key driver.
As for the service industry, it saw 19.8% increase from 24.7% seen in Q1 2024, while the manufacturing sector saw a 0.2% increase against a 2.9% shrinking in Q1 2024.
RISKS Ahead
Danucha said that despite the better-than-expected performance of the Q2 data, there were many risk factors ahead.
He cited the continued high household debts as one of the key issues. Thailand’s household debts are more than 16.4 trillion Baht or about 91% of the GDP.
This coupled with the cautious lending by the financial institutions are creating a bigger problem for the small & medium sized enterprises (SME).
He said that the non-performing loans in the SME sector is as high as 7.5% of the loans while those of the special mention loans (SML) has risen to as high as 12%.
Apart from this the NPL for the mortgage loans and the hire/purchase has been on the rise and therefore there is a need to be vigilant going into the future.
NESDC said that the debts of the credit card have been on the rise, which means a lot of people are using credit card to make their ends meet.
Thailand’s private investment has not been that big, foreign investments have been on a decline for the past few years and there is a need to attract more investments. Change in policies and the upgrading of knowhow to attract investments is needed for attracting semiconductor, robotics etc.
The current structure of exports is mostly in the mid-tech industries when compared to other countries in the region. We therefore need to raise the level of this through the board of investment (BoI). Espe
H2 Outlook
Danucha said that there are various issues that needs to be looked out in 2nd half of 2024 from the domestic issues to international trade and investments.
- Must maintain the outlook for stable government especially after what happened
The use of the budget and the smooth transition would help.
- Private investments have to be revived with new rules and regulations.
- Need to invest in the infrastructure and investments and promotion of EEC is needed
- Anti-dumping of goods that are substandard needs to be investigated as well and authorities needs to have rules for such imports.
- Look at ways to stop the smuggling of illegal goods that impacts the SME sector
- Need to look at the liquidity issue for the SME, there is PromtBiz but not many people know this and there is a need to promote and use PromtBiz, people only know about PromptPay but not about PromptBiz.
- There is a need to figure out ways to create more credit guarantee facilities for the SMEs and other businesses
- The restricting of the SME and personal/household loans needs to be sorted out as well this will help increase the liquidity in the system and help.
- The budget disbursement needs to be more prudent and expedited to help stimulate the economy
- Thailand is also heading to the haze season soon and the PM2.5 will have an impact on the tourism sector around Q4, which is the peak season of the tourism industry and therefore there is a need to look into it before it happens.
- The last is the impact on Thailand from the global economic fallout (if and when it happens). There is a need to keep an eye on it