April 15, 2024
BANGKOK – The comments by senior country officer Marco Sucharitkul came after several financial institutions, including the Bank of Thailand, reduced Thailand’s 2024 GDP growth forecast from around 3% to 2.3-2.7% due to weaker-than-expected export growth and declining manufacturing competitiveness.
Marco believes Thailand stands out as a beacon of hope in Southeast Asia, demonstrating resilience and growth potential despite global financial constraints.
He predicted that 2024 would be a year of recovery for the Thai economy, driven by factors such as fiscal relaxation, a sustained revival in tourism, and normalisation of service sector employment.
Meanwhile, the government’s proactive measures, such as extending visas for specific groups, streamlining visa processes for key tourist markets, and promoting foreign investment, are expected to strengthen Thailand’s economic landscape. Notably, initiatives of the Board of Investment to boost competitiveness and attract foreign direct investment bode well for the country’s economic growth trajectory.
He pointed out that despite the delay in the 2024 Budget Act, it was finally approved, signalling more upcoming stimulus measures to help drive the economy forward.
His thoughts were consistent with those of some experts and leading entrepreneurs who believe that certain government initiatives, such as digital wallets, would help the country’s growth exceed expectations.
The Thai government reiterated this week that the scheme would go ahead as planned, with benefits distributed in the fourth quarter of this year. Prime Minister Srettha Thavisin said the government was now seeking advice from a legal team to ensure that the scheme followed the law.
According to the Krungthai Compass Research Centre, the Thai government’s digital wallet scheme, with a budget of 500 billion baht in one-time handouts, would be a critical tool to jumpstart the economy.
Due to Thailand’s sluggish economy, with growth rates consistently lower than potential caused by a slowdown in trading partners and domestic purchasing power, state-owned bank analysts saw the digital wallet as a “quick-win” measure to help vulnerable domestic sectors while boosting confidence in Thailand’s economic growth.
In addition, it noted that the handout scheme could help to integrate the informal economy into the formal sector. Given that the kingdom’s informal economy accounts for 48.4% of its GDP, transitioning to a data-driven and digital economy is becoming increasingly important.
However, in order to sustain Thailand’s growth and improve its competitiveness, experts said the country needed structural reforms.
In March, the World Bank released the Systematic Country Diagnostic Update for Thailand, titled “Shifting Gears: Towards Sustainable Growth and Inclusive Prosperity”, which shed light on the country’s development challenges and opportunities in pursuit of sustainable growth and shared prosperity.
The report outlines five key priorities for Thailand to accelerate poverty reduction and foster sustainable development in the face of economic, environmental, and societal pressures.
It recommended that Thailand focus on developing human capital, encouraging innovation, unlocking growth in secondary cities, ensuring climate resilience, and strengthening fiscal institutions.
The bank praised Thailand’s emphasis on improving learning outcomes, increasing technological competitiveness, promoting sustainable practices, and strengthening institutions.
The move aligns with Southeast Asia’s overall goals for sustainable economic development and has the potential to strengthen Thailand as the world shifts towards a green economy.
Challenges ahead
As the world navigates a complex economic landscape in 2024, Marco noted that Southeast Asia was emerging as a key focal point, despite several challenges.
The region’s economic prospects are influenced by restrictive domestic policies, ongoing global financial constraints, and moderating external demands, particularly as China’s growth slows, he said.
Foreign direct investment slowdowns and El Niño’s impact on agricultural production further complicate the situation. Furthermore, political and geopolitical uncertainties in Indonesia, Malaysia, and Myanmar continue to cast a shadow on the region.
Despite these headwinds, he estimated that ASEAN markets would experience weakness in the first half of 2024, due to ongoing foreign outflows. However, a strategic focus on high-quality stocks and sectors with underlying drivers such as fiscal stimulus, strong domestic demand, and attractive valuations may help mitigate the impact of global challenges.
Investment recommendations
Given Thailand’s promising economic outlook, JPMorgan Thailand senior country officer Marco said that the investment strategies should be based on sectoral opportunities.
In addition, he said that forecasts for the baht and stock index show positive trends, with year-end targets of 550 for the MSCI Thailand index and 1700 for the Stock Exchange of Thailand.
Investor behaviour is expected to shift towards laggards and rate beneficiaries as a result of market dynamics and policy decisions.
While challenges remain in the global economic landscape, he believes Southeast Asia, particularly Thailand, had demonstrated resilience and growth potential, creating opportunities for investors and stakeholders in the region.
Stakeholders can position themselves for success in the changing economic landscape of 2024 by navigating uncertainties with strategic investments and a focus on economic drivers, he said.