Thailand’s economy delivered an unexpected boost in the third quarter, driven by government spending and a rebound in exports.
While these gains have brightened the outlook, the underlying challenges of muted household consumption and debt pressures keep the debate on rate cuts alive.
Gross domestic product expanded by 3.0% year-on-year, exceeding the 2.4% median forecast from economists surveyed by Bloomberg.
Quarter-on-quarter, the economy grew by 1.2%, marking a stronger recovery than the 0.8% estimate.
However, Thailand’s growth lags behind regional peers, such as Indonesia and Malaysia, which posted quarterly expansions of 4.95% and 5.3%, respectively.
Prime Minister Paetongtarn Shinawatra’s administration is preparing new stimulus measures, including cash handouts, to sustain economic momentum into next year.
The National Economic and Social Development Council (NESDC) noted that public investment will be a major driver of growth in 2025, helping bolster private consumption and tourism.
Despite these efforts, household spending decelerated, leaving the government under pressure to address borrowing costs.
Economists, including Tamara Mast Henderson of Bloomberg Economics, suggest the Bank of Thailand will likely hold rates steady in December, as state-led initiatives begin to support growth.
Earlier, the central bank implemented a surprise rate cut in October, the first since 2020.
Public investment surged by more than 25% in the third quarter, marking its first growth in six quarters, while total investment rose 5.2%, reversing a 6.1% contraction from the previous quarter.
However, private investment fell by 2.5%, reflecting tightened lending practices and cautious business sentiment amid deteriorating credit quality.
On the trade front, Thailand recorded a $5.8 billion surplus, driven by higher export volumes of rice, rubber, and telecommunications equipment.
Declines in automotive and petroleum exports highlighted global demand inconsistencies.
These trade figures underscore the importance of government policies in safeguarding the country’s business environment and sustaining its recovery trajectory.
The NESDC projects GDP growth of 2.6% this year and between 2.3%–3.3% for 2025.
However, concerns remain over U.S. trade policies and high household debt levels, even as upcoming debt relief measures aim to ease these burdens.
Recent flooding caused limited economic impact, with damages estimated at 60 billion baht ($1.7 billion).
“Private consumption decelerated and private investments contracted, but exports and government spending offered a brighter outlook,” the NESDC reported.
For now, Thailand’s economic recovery relies heavily on state-driven growth, with public investment as its cornerstone.
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