Bangkok: Standard Chartered Bank has projected Thailand's GDP growth at 2.8% for the year 2025, a figure that aligns with the Monetary Policy Committee's (MPC) decision to maintain the policy interest rate. Dr. Tim Leelahaphan, Assistant Managing Director for Economics in Thailand and Vietnam at Standard Chartered Bank (Thai), indicated an 80% likelihood that the MPC would vote unanimously to keep the policy interest rate steady at 2.25%, favoring economic recovery despite low inflation.
According to Thai News Agency, the bank anticipates a potential one-time interest rate cut later in the year, possibly during the June meeting. Dr. Tim highlighted that the Federal Reserve's absence of urgency in reducing interest rates, combined with the Bank of Thailand's (BOT) need to preserve policy space, contributes to the likelihood of delaying any rate cuts.
The Thai baht has exhibited volatility, strengthening since the beginning of the year due to factors like high gold prices, tourism recovery, and diminished trade war concerns. However, its continued strengthening remains uncertain, with predictions suggesting it could approach 35.00 baht per US dollar by year's end.
In terms of economic expansion, Standard Chartered forecasts the Thai economy to grow by 2.5% in 2024, up from 2% in 2023, with a gradual recovery expected to continue into 2025. This outlook takes into account the ongoing recovery in tourism and the initiation of the next phase of the digital wallet project valued at approximately 140 billion baht, set to commence in April.
Despite improvements in exports, confidence is hampered by uncertainties surrounding US trade policies and a contraction in automotive exports anticipated in 2024. The country's economic growth has recently been driven more by private consumption, which has started to slow, indicating a shift in economic drivers.
Tourism has shown promising recovery, with tourist numbers reaching 3.97 million by early February, matching levels seen in 2019. This sector is expected to further bolster the economy through the year's second half.
However, risks remain, particularly concerning US trade policies, and economic growth may lack additional support beyond consumption and tourism. The bank predicts core inflation to rise to 0.9% in 2025, up from 0.6% in 2024, with headline inflation forecasted at 1.3%, up from 0.4% in 2024. Inflation is expected to slow mid-year before picking up again.
Standard Chartered maintains its current account forecast at 4% of GDP for this year, with headline inflation anticipated to return to the BOT's target range of 1-3%, given the low base. The bank continues to monitor international trade developments despite recent improvements.