The government's planning agency is maintaining its GDP forecast for this year but advises the government to speed up implementing measures to boost the economy and prepare the 2025 budget to address economic volatility caused by global crises.
According to Danucha Pichayanan, secretary-general of the National Economic and Social Development Council (NESDC), the GDP forecast for the entire year is expected to be between 2.3% and 2.8%, with an average of 2.5%.
This is consistent with the previous forecast issued in May, which was between 2-3%, also with an average of 2.5%.
The NESDC reported on Monday that the economy in the second quarter of 2024 expanded by 2.3% year-on-year thanks largely to stronger consumption, tourism and exports, accelerating from 1.6% in the first quarter.
After being seasonally adjusted, the economy grew by 0.8% from the first quarter of 2024.
In the first half of 2024, the economy grew by 1.9% from the corresponding period of last year.
Regarding economic support measures, Mr Danucha said it is still uncertain whether the government will proceed with the 500-billion-baht digital wallet handout scheme, as this would depend on the new administration.
However, the government must implement economic support measures during this period, particularly those that assist low-income earners, he said.
"In any case, it is essential to have measures that support low-income individuals, using available resources and tools," Mr Danucha said.
He emphasised that stimulus measures need to be carefully timed and aligned with available resources. It is crucial to have some initial measures in place and then evaluate their impact, given that resources are limited, he said.
"The stimulus should be applied appropriately in terms of timing and scale, in consultation with the Finance Ministry and the Bank of Thailand," he said.
Additionally, he said that in the 2025 budget, the government should allocate funds to address global volatility due to increasing conflicts in various regions and the likely escalation of trade wars, which could severely impact the Thai economy.
Therefore, it is necessary to review the available budget for 2025 to prepare for such volatility, and discussions with the prime minister and the cabinet would be required.
He also emphasised the need for targeted measures to address rising bad debt and special mention loans in auto, real estate and credit cards, as well as the necessary resources to address these debt issues.
He also expressed concern over foreign direct investment, noting that the inflow of funds had decreased compared with the periods 2000 to 2016 and 2021 to 2023.
He emphasised the need to build a strong foundation to attract foreign investment, including improving regulations, enhancing the capabilities of the domestic workforce and attracting investment in target industries such as semiconductors.
He pointed out that the majority of the current export structure consists of medium-tech products, with relatively few high-tech products compared with neighbouring countries.
Economists and stock market analysts noted that the actual second-quarter GDP aligns closely with the market's projection of 2.2%. However, the economic outlook for the remainder of the year will largely depend on government spending and a boost in consumption.
Nattaporn Triratanasirikul, deputy managing director of Kasikorn Research Center (K-Research), said the slower than expected budget disbursement is a key factor, noting that the second-quarter GDP came in slightly below the centre's forecast, despite an improvement in exports.
"The overall sentiment is still within our expectations," she said, adding that K-Research expects the economy to expand at least 3% in the second half.
"We believe the full-year GDP for 2024 will remain on target at 2.6%, but it's crucial that the government accelerates budget disbursement in the latter half and implements stimulus measures in the fourth quarter, injecting 100-150 billion baht into the economy," she said.
The recently released GDP data prompted K-Research to believe that the Bank of Thailand would keep the interest rate unchanged at 2.5% for the rest of the year, Ms Nattaporn said. She added that exports need to be closely monitored due to persistently high freight rates, which could impact overseas shipments in the final quarter, traditionally a peak season for cargo bound for the US.
Rakpong Chaisuparakul, senior vice-president at KGI Securities (Thailand), said the outlook for the second half of the year will heavily depend on the pace of government spending and the nature of upcoming consumption stimulus measures.
He pointed out that there is a greater likelihood that the Pheu Thai party's populist policies will be more accessible than before, which could positively impact consumption momentum.
"The baht has shown significant appreciation since last Friday, partly due to market expectations that the new government might shift from the controversial digital wallet stimulus to a more traditional approach of injecting funds for mid-to-low-income citizens," he said.
KGI Securities believes that if the new government adopts more conventional methods to boost consumption, the rural consumption market and non-bank financial sector could benefit, especially if the purchasing power of lower-income consumers improves.
Pichai Lertsupongkit, chief commercial officer of InnovestX Securities, noted that the economy is on track to grow by at least 2.3% this year, as the new government Pheu Thai-led government is likely to pursue most of its main economic policies.
"If the digital handout project does not proceed, the Paetongtarn administration is expected to reallocate some of the funds earmarked for that scheme to support new measures aimed at boosting consumption, given the decline in consumer purchasing power," he added.