By Rahul Trivedi
BENGALURU (Reuters) – Thailand’s economy likely grew at its fastest pace in over two years last quarter, driven by a surge in foreign tourists and strong exports that helped offset sluggish domestic demand, a Reuters poll of economists found.
While household consumption is expected to remain under pressure despite the government’s cash handout to stimulate demand, exports and a steady flow of tourists during the holiday season probably helped growth.
Southeast Asia’s second-largest economy was forecast to expand 3.9% in the October-December period, compared with the same period the previous year, according to the median prediction in a February 6-12 Reuters poll of 15 economists, up from 3.0% in the previous quarter.
Forecasts for the data, due on February 17, ranged between 3.1% to 4.6%.
“The good news is the recovery we saw in Thai exports last year continued (into) Q4, both on the goods and services side. Services mostly reflect the recovery in the tourism sector,” said Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics.
“Q4, in a one-liner, would be stalling domestic demand, which is going to be offset to some extent by the continued strength in exports,” Chanco added.
But on a quarterly basis, gross domestic product (GDP) likely grew a seasonally adjusted 0.7%, down from 1.2% the previous quarter, according to a smaller sample of forecasts.
Several economists in the poll said the service sector continued to accelerate, driven by a revival in tourism, while manufacturing continued to struggle.
Eugene Tan, an associate economist at Moody’s, attributed the slowdown in manufacturing to declining demand in the auto industry.
“On the expenditure front, private consumption, the heavyweight of GDP, has faltered, signaling broader economic weakness,” Tan said.
While the government expects Thailand’s economy to grow 3.0%in 2024, up from 1.9% in 2023, central bank Governor Sethaput Suthiwartnarueput cautioned that weak consumption could hold back growth.
In an interview with Reuters, he suggested actual growth might be closer to 2.7%, aligning with the Reuters poll median.
An economic slowdown in China – Thailand’s largest trading partner and a key source of tourism revenue – along with weak global demand and the escalating U.S.-China trade war could further pressure the country’s trade prospects and weigh on its growth outlook this year.
A separate Reuters poll projected Thailand’s economic growth to average 2.9% in 2025. Deputy finance minister, Julapun Amornvivat, estimated the economy to grow 3.5%.
(Reporting by Rahul Trivedi; polling by Veronica Khongwir; Editing by Ros Russell)
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