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Investing.com -- Capital Economics on Monday highlighted that Thailand's economic growth is anticipated to gain momentum this year, driven by an expansionary fiscal policy and a continued rebound in tourism spending.
Despite a slowdown in the fourth quarter (Q4) of last year, with gross domestic product (GDP) rising by 3.2% year-on-year (y/y) which was below the consensus forecast of 3.9%, the firm maintains a positive outlook for the Southeast Asian nation.
The Q4 GDP figure was in close agreement with Capital Economics' own projection of 3.3%. On a quarter-on-quarter (q/q) basis, growth decelerated to 0.4% from 1.2% in the third quarter (Q3).
Nevertheless, the economy remained approximately 5.0% above its pre-pandemic level, though it still lags behind the pre-pandemic trend, marking one of the weakest recoveries in Asia.
For 2024, the GDP growth rate was recorded at 2.5%, an improvement from 2.0% in 2023.
The Q4 deceleration was broad-based, with a marginal decrease in private consumption growth and a significant drop in fixed investment due to widespread weakness in both public and private sector investment.
Government consumption also saw no growth. Additionally, capacity utilization rates in Thailand’s industrial sector have been decreasing, indicating potential challenges for private sector manufacturing investment.
Bank lending to businesses and households has also declined year-on-year for two consecutive quarters.
However, Capital Economics anticipates that public demand will bolster GDP growth in the upcoming quarters.
Thailand plans to implement a looser fiscal policy compared to other Asian economies, with the government forecasting the budget deficit for the current fiscal year (October 2024 – September 2025) to widen to 4.4% of GDP from the previous 3.6%.
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