IMF upgrades Thailand's GDP growth projection for 2024
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IMF upgrades Thailand's GDP growth projection for 2024

The International Monetary Fund (IMF) projects Thai GDP growth of 4.4% for this year, up from 2.5% in 2023.

Thailand's real GDP is estimated at 2.5% growth in 2023, supported by an acceleration of services exports and private consumption in the fourth quarter of last year, while headline inflation is expected to average 1.3%, according to the IMF Executive Board 2023 Article IV Consultation with Thailand, which was released on Monday.

The economic recovery was likely gradual last year and is expected to accelerate in 2024, attributed to improvements in external demand and robust growth in private consumption bolstered by the government's fiscal stimulus, said the fund.

Thailand's economy is projected to grow by 2% in 2025, said the IMF.

The growth last year was slightly lower than the IMF projection of 2.7% as of November 2023.

Growth is projected to increase to 4.4% this year, higher than the previous projection of 3.6% in mid-October last year.

However, Thailand's economic recovery is losing momentum amid decelerating inflation, noted the IMF.

Economic activity expanded by 2.6% in 2022 and by 1.9% in the first to third quarters of last year.

Driven by higher demand, headline inflation is expected to accelerate to 1.7% in 2024, which is within the Bank of Thailand's target range.

The current account balance is expected to post a small surplus in 2023, then increase on that momentum this year as the tourism recovery continues, while the decline in freight costs offsets the weak performance of merchandise exports, the IMF said.

The IMF executive directors welcomed Thailand's post-pandemic economic recovery and commended the authorities for maintaining macroeconomic stability amid multiple shocks.

However, the recovery is slower than regional peers and the economic outlook remains highly uncertain, with risks tilted to the downside, said the fund.

"Given limited fiscal space and longstanding structural weaknesses, the IMF encouraged the authorities to continue with gradual policy normalisation in the near term, while implementing bold structural reforms to boost productivity and potential growth, while building climate resilience," noted the consultation.

The directors noted the authorities' announced near-term policy measures to stimulate economic growth, but considered a neutral fiscal stance, with targeted and sustained support for vulnerable groups through enhanced social safety nets and a more progressive tax system, as better suited for addressing poverty and inequality.

The IMF said the Bank of Thailand's current neutral monetary policy stance remains appropriate, but the authorities should stand ready to tighten the monetary stance if inflationary risks from external shocks or domestic policies materialise.

The fund encouraged the authorities to implement structural reforms to promote investment and improve competitiveness and productivity.

The IMF also pushed the need to remove excessive regulation, upskill the labour force, and reform the social protection system.

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