The Thai economic outlook is experiencing positive shifts, with notable projections for export growth and discussions surrounding policy interest rates.
The Export-Import Bank of Thailand (Exim Bank) anticipates exports to grow by 3% this year and the next, marking the first occasion in six years where export growth reaches this level. According to Rak Vorrakitpokatorn, president of Exim Bank, the Thai economy is expected to thrive on recovering domestic demand fueled by government spending, investment, and sustained international demand from tourism and exports.
This expected growth is strongly backed by continuous global economic expansion, as the International Monetary Fund (IMF) forecasts global economic growth at 3.2% for both 2024 and 2025. Meanwhile, overall global trade is set to rise by 3.4%, surpassing the 10-year average of about 2.8%. Noteworthy markets include India, as well as the CLMV countries (Cambodia, Laos, Myanmar, and Vietnam), the Asean-5 nations, and the Middle East, with respective predicted growth rates of 6.5%, 5.3%, 4.5%, and 3.8%.
Popular exports include electronics, agricultural products, and lifestyle goods such as cosmetics and pet food. Yet, challenges loom on the geopolitical horizon, particularly conflicts affecting the Middle East, which may influence fluctuations in freight rates, oil prices, and possibly ignite tension reminiscent of previous trade wars.
Mr. Rak emphasizes Exim Bank's dedication as a specialized financial institution working closely with Thai entrepreneurs aiming for international trade and investment growth. The bank is prioritizing exports and investments within sectors where Thailand holds strong potential, aligning with global consumer demands. These sectors include food security items like canned tuna and processed chicken, eco-friendly products such as bioplastics and solar panels, and products promoting happiness or unique experiences, like pet food and wellness tourism offerings. He highlights air-conditioners and transformers as products likely to sustain growth through U.S. policy shifts potentially driving import taxes on competing markets.
On another front, Finance Minister Pichai Chunhavachira has called for reducing the policy interest rate to stimulate Thai inflation. During the Monetary Policy Committee (MPC) meeting, he expressed the ministry’s desire for the MPC to announce another rate cut to escalate the low inflation levels currently affecting the economy.
Pichai acknowledges the MPC's autonomous decision-making authority and notes the Finance Ministry's continuous provision of relevant economic data aimed at fostering productive discussions with the Bank of Thailand. He revealed plans for the inflation management framework to be presented for cabinet consideration and subsequent announcement for 2025.
The minister also confirmed preparations for the second phase of the 10,000-baht cash handout for individuals aged 60 and above, set to roll out during the forthcoming Chinese New Year. Local research institutes predict the central bank will maintain the policy rate at 2.25% during its upcoming meeting to allow time to assess previous rate adjustments and the impacts of government stimulus measures.
Kasikorn Research Center (K-Research) foresees the MPC might opt for additional cuts beginning February 2025, motivated by apprehensions stemming from potential increases to U.S. tariffs and stiffening competition from Chinese imports.
Turning to corporate moves, Bangchak Corporation has made strides by investing significantly, acquiring 65% of Thai Kali Co., the operator of a potash mine located near Nakhon Ratchasima. This acquisition aligns with Bangchak's strategic business diversification plan toward upstream industries.
Wannasiri Trongtrakulwong, executive vice-president, indicated this investment forms part of Bangchak’s broader aim to reinforce its standing across various fields, contributing to its aspirations to be influential within the energy sector and sustainably operate diverse businesses, including renewable energy production.
Meanwhile, the share prices of companies within the Charoen Pokphand (CP) Group reflected investor skepticism. CP Axtra Plc (CPAXT) witnessed significant declines after the company announced its impending 8 billion baht investment to explore real estate ventures, particularly through its joint venture Happitat. The stock fell over 15% following the announcement and raises questions about the attractiveness of recent investments amid the broader economic climate.
Saowaluck Thithapant, CPAXT's chief wholesales business officer, defended the investment strategy by stating, "This investment would be beneficial to CPAXT," which signifies the importance CP places on ventures supporting its mixed-use real estate development growth.
Despite some negative market reactions, the CP Group still managed to secure substantial government contracts and remains adaptable to changing economic conditions. Overall, the Thai economy, bolstered by diverse sectors and extensive initiatives, shows resilience and holds promise as it navigates 2024 and beyond.
With these developments, key sectors across Thailand are under close scrutiny to secure paths toward recovery, sustainability, and continued growth.
