IMF ups 2024 Thai growth forecast to 3.6%
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IMF ups 2024 Thai growth forecast to 3.6%

New government has opportunity to implement ‘decisive and comprehensive reforms’

Workers process chicken at a Charoen Pokphand Foods plant in Nakhon Ratchasima. (File photo)
Workers process chicken at a Charoen Pokphand Foods plant in Nakhon Ratchasima. (File photo)

The International Monetary Fund (IMF) has revised its forecast for Thai gross domestic product (GDP) growth upward in 2024, based on robust private consumption gains and improving external demand.

The country’s economy is projected to grow 2.7% this year and 3.6% next year, amid a highly uncertain global environment, the IMF said on Wednesday.

The 2024 forecast is up from 3.2% predicted in mid-October, attributed to gains in external demand and solid growth in private consumption, the IMF said in a statement after a staff visit between Oct 24 and Nov 7.

Headline inflation is estimated to average 1.3% in 2023 because of continued measures to keep energy prices low and further improvements in global supply chains.

Given the uptick in growth next year, headline inflation is expected to increase slightly to 1.6%, said the global lender.

Continued normalisation of macroeconomic policies in the near term will help rebuild fiscal buffers and ensure financial stability, said the IMF.

Starting in fiscal 2025, a gradual medium-term fiscal consolidation supported by enhanced revenue mobilisation and improved spending efficiency should create room for needed investment in infrastructure and skills, while keeping public debt on a declining path, it added.

The successful formation of the new government, it observed, offers an opportunity to implement “decisive and comprehensive reforms” to boost productivity and support sustained and inclusive growth, said the organisation.

The country’s neutral monetary policy stance is appropriate, but the Bank of Thailand should stand ready to tighten its monetary stance if inflationary risks from external shocks or domestic policies materialise, the IMF said.

The central bank should monitor financial stability risks as vulnerabilities may arise from sharp swings in real interest rates, said the fund.

The IMF welcomes the central bank’s plans to introduce new measures to address high household debt, specifically responsible lending guidelines, while assisting those with persistent debt issues.

It recommends proactive debt restructuring combined with the new measures to contain the country’s swelling household debt problem.

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