Thailand's GDP Growth Surges in Q3

Thailand's Gross Domestic Product (GDP) grew by 3.0% in the third quarter of 2024 compared to the same period last year, according to data from the National Economic and Social Development Council (NESDC). This growth rate surpasses the median forecast of 2.6% in a Reuters poll and represents an acceleration from the revised annual growth of 2.2% in the second quarter.

The growth in Southeast Asia's second-largest economy was primarily driven by the service sector, while the industrial sector decelerated and agricultural production dropped, as stated by the NESDC in a recent release.

Despite the positive growth, there are potential risks ahead, including the impact of U.S. economic policies, as highlighted by NESDC head Danucha Pichayanan during a press conference. He emphasized that budget spending to boost the economy will need to be more targeted in the coming year.

Quarterly Growth at an 18-Month High

On a quarterly basis, GDP expanded by a seasonally adjusted 1.2% in the third quarter, marking the fastest pace in 18 months and exceeding both the poll forecast and the previous quarter's growth of 0.8%.

Economist Chamadanai Marknual from Krungthai Bank predicts that the momentum in the fourth quarter should be stronger, potentially pushing annual GDP to reach 4%. However, he also notes that the outlook for next year remains uncertain due to factors such as the ongoing trade war and government measures.

Economic Indicators and Forecasts

The Thai stock market responded positively to the news, with the main stock index up 0.8%, and the baht strengthening 0.2% against the dollar. The NESDC forecasts GDP growth of 2.6% for this year, within the previous range of 2.3% to 2.8%, and projects growth of 2.3% to 3.3% in 2025.

Last year's growth of 1.9% lagged behind regional peers, reflecting challenges such as high household debt, borrowing costs, and sluggish demand from major trading partner China. The central bank's unexpected cut in the policy interest rate to 2.25% on October 16 is expected to provide some relief.

Government Stimulus and Sector Projections

Finance Minister Pichai Chunhavajira announced plans to consider additional stimulus measures, including the second phase of the "digital wallet" handout scheme. This flagship program, which provides 10,000 baht to about 45 million people, has already disbursed about one-third of the payments since its launch in September.

Tourism and exports, key drivers of Thai growth, are expected to continue supporting the economy next year. The NESDC revised its export growth forecast to 3.8% for this year from 2%, and anticipates a 2.6% increase in 2025. The agency also adjusted its foreign tourist projection to 36 million for this year and expects it to rise to 38 million in 2025.