Krungsri Research upbeat on economic forecast for Q1
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Krungsri Research upbeat on economic forecast for Q1

Krungsri Research forecasts the Thai economy will not enter a technical recession as the outlook improved for the first quarter this year.

Regarding economic stimulus schemes implemented earlier, such as visa exemptions for foreign tourists and the Easy E-Receipt tax refund, they should help the economy in the first quarter as the tourism sector rebounds, said the think tank.

As a result, Krungsri Research does not expect a technical recession this year.

The bank is monitoring the economy in the first quarter, said Krungsri chief economist Pimnara Hirankasi.

A technical recession is defined as a decline in a country's real GDP for two consecutive quarters.

According to the National Economic and Social Development Council, GDP expanded 1.7% in the fourth quarter of 2023, down by 0.6% quarter-on-quarter.

In 2024, Krungsri forecasts GDP growth of 2.7%, lower than the potential growth rate of 3-3.5% as the economy remains sluggish following the pandemic. Growth will be driven mainly by tourism and government investment, said the research house.

Foreign arrivals are predicted to rise to 35.6 million, up from 28.2 million in 2023.

The tourism revival should support domestic consumption and employment, said Ms Pimnara.

Private consumption growth should normalise to 3.1% this year from a high base of 7.1% last year, she said.

However, swelling household debt, which exceeds 90% of GDP, and El Niño weather conditions will continue to pressure domestic consumption this year, noted the think tank.

Ms Pimnara said government investment should stimulate economic expansion this year.

Krungsri predicts government budget disbursement for fiscal 2024 will start in April, lifting the country's economy from the third quarter this year.

Public investment is expected to expand by 2.4% this year, picking up from a 4.6% contraction in 2023.

The improvement should also support private investment growth of 3.3% this year, up from 3.2% last year, noted Krungsri.

This year several major central banks are expected to cut policy rates by mid-year, led by the US Federal Reserve, said the research house.

"There is a greater possibility the Bank of Thailand will begin to cut its rate in the second half as a result of low inflation and economic growth," said Ms Pimnara.

The market expects the Bank of Thailand's Monetary Policy Committee to cut its policy rate by one or two times this year, she said.

However, the Bank of Thailand's rate cut would be smaller than reductions pursued by the Fed, said Ms Pimnara.

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