SCB EIC, the research centre of Siam Commercial Bank (SCB), forecasts Thailand is likely to experience a soft economic landing next year as growth momentum slows.
The centre maintains its 2024 economic growth forecast for Thailand at 2.5%. However, EIC downgraded the 2025 outlook to 2.6% from previous forecasts of 2.9-3%.
The downward revision reflects the softer momentum of Thailand's economic expansion, pressured by both structural and cyclical factors in the medium to long term, said EIC chief economist Somprawin Manprasert.
The government's stimulus measures, including cash handouts to vulnerable groups this year, are expected to lift GDP by 0.5-0.7 percentage points, according to the centre.
If the handout measures continue into next year, they could support the country's economic growth by up to three percentage points, noted EIC.
"Although the government plans to implement stimulus packages, the economy is already headed towards a soft landing," said Mr Somprawin.
"The EIC will monitor the new government's economic policies and assess the next stage of economic development."
He said Thailand's economy could potentially face a hard landing, depending on three factors: a global economic recession, domestic political instability affecting fiscal budget disbursement, and tightening in the country's financial system.
In the worst-case scenario, EIC anticipates GDP growth of 1.9% in 2025, but the likelihood of this scenario is less than 50%.
According to Mr Somprawin, Thailand's high household debt remains a significant challenge, exerting pressure on economic growth in the longer term.
This structural issue impacts domestic consumption, the manufacturing sector and foreign direct investment, as overseas investors tend to prioritise domestic consumption when investing abroad, he said.
Mr Somprawin said many of the new government's immediate economic policies reflect a continuation of the previous administration's strategies, albeit with a greater focus on supporting vulnerable households and businesses.
EIC anticipates short-term stimulus measures will benefit sectors related to consumption, tourism and agriculture.
However, industries heavily reliant on low-wage workers may face increased cost pressures, and the energy sector could see a decline in revenue, according to the centre.
Conversely, policies to bump up competitiveness are expected to favour businesses related to infrastructure, industries aligned with global trends and emerging sectors, noted EIC. Environmental policies will present both challenges and opportunities, requiring many businesses to adapt.
Structural challenges continue to weigh on the economy, especially for the automotive industry, which potentially could lose around 40% of its domestic production capacity if manufacturers fail to adapt to shifting market preferences, said the research house.
The competitiveness of local small and medium-sized enterprises also remains a concern, noted EIC.