IMF Executive Board Concludes 2024 Article IV Consultation with Thailand
IMF News, February 20, 2025
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- Published: February 20, 2025
Key findings on recent developments
- Economic activity expanded modestly by 1.9 percent in 2023 and 2.3 percent in the first three quarters of 2024, driven by private consumption growth and a rebound in tourism.
- Inflation averaged 0.4 percent (y/y) annually in 2024, below the Bank of Thailand’s target range of 1 to 3 percent.
- External factors (decline in global energy and food prices, lower import prices) and domestic factors (energy subsidies, price controls, unwinding of pandemic-related fiscal support) contributed to lower inflation.
- The current account balance strengthened to 1.4 percent of GDP in 2023, from -3.5 percent of GDP in 2022, and continued to register a moderate surplus as of November 2024, supported by tourism recovery and higher exports.
- Delayed budget implementation slowed public investment in 2024.
Projections and outlook
- Real GDP growth projections:
- 2024: 2.7 percent
- 2025: 2.9 percent
- 2026: 2.6 percent
- Growth drivers:
- Expansionary fiscal stance envisaged under the 2025 budget, including additional cash transfers of 1.0 percent of GDP and a rebound in public investment.
- Continued recovery in tourism-related sectors and a boost to private consumption from authorities’ cash transfers.
- Inflation outlook:
- Inflation expected to pick up as growth firms but remain in the bottom half of the target range in 2025.
- Current account:
- Expected to improve further in 2024 and 2025, driven by ongoing recovery in tourist arrivals.
Downside risks
- External risks:
- Escalation of global trade tensions or deepening geoeconomic fragmentation could disrupt export recovery and FDI inflows.
- Increased commodity price volatility could cause inflation spikes and tighter-for-longer global financial conditions.
- Intensification of regional conflicts could disrupt trade and travel.
- More frequent extreme climate events would adversely impact growth prospects.
- Domestic risks:
- Private sector debt overhang could impair financial institutions’ balance sheets and reduce credit supply.
- Renewed political uncertainty could hinder policy implementation and undermine confidence.
Executive Board assessment and recommended policy priorities
- Overview:
- Directors endorsed staff appraisal that the recovery is ongoing but relatively slow and uneven, with longstanding structural weaknesses and significant downside risks.
- Fiscal policy:
- As slack narrows, shift focus to rebuilding fiscal space.
- A less expansionary fiscal stance than envisaged under the FY25 budget would still support recovery while preserving policy space.
- Reallocating part of planned cash transfers toward productivity-enhancing investments or social protection would enable stronger inclusive growth and help reduce the public debt-to-GDP ratio.
- Starting in FY26, implement a revenue-based medium-term fiscal consolidation to bring down public debt and rebuild buffers.
- Strengthen fiscal rules using a risk-based rules approach; adequately account for costs associated with quasi-fiscal operations (e.g., energy price caps); closely monitor fiscal risks.
- Improve data provision for government finance statistics and SOEs.
- Monetary policy:
- Staff welcomes the Bank of Thailand’s decision to cut the policy rate in October and recommends a further reduction to support inflation and improve borrowers’ debt-servicing capacity with limited risk of additional leverage amid tight lending.
- Authorities should remain ready to adjust monetary policy in a data- and outlook-dependent manner.
- Central bank independence with clear communication is key to anchoring inflation expectations.
- Exchange rate and FX policy:
- Maintain flexible exchange rate as shock absorber.
- Complementary use of FX intervention (FXI) could alleviate policy trade-offs by smoothing destabilizing premia when large non-fundamental shocks render FX markets dysfunctional.
- Further liberalize the FX ecosystem and phase out remaining capital flow management measures to deepen FX markets and limit the need for FXI over time.
- Financial sector and household deleveraging:
- Deploy a comprehensive package of prudential and legal measures to facilitate orderly private deleveraging.
- Staff welcomes measures addressing the existing household debt stock and buildup of new leverage, but calls for simultaneous and forceful implementation of personal debt workouts via more effective bankruptcy proceedings to lower household debt stock.
- External rebalancing and structural reforms:
- The external position in 2024 was moderately stronger than warranted by fundamentals and desirable policy settings.
- Policies to promote investment, enhance social safety nets, liberalize the services sector, and minimize tax incentives and subsidies that distort competition would facilitate external rebalancing.
- Reform priorities: facilitate competition and openness; upgrade physical and ICT infrastructure; upskill/reskill the labor force; increase export sophistication by leveraging digitalization; strengthen governance.
- Provide an adequate social protection floor to vulnerable households to enhance resilience and address structural drivers of household debt accumulation.
Selected key statistics and indicators (as reported)
- Per capita GDP (2023): US$7,338
- Exchange Rate (2023): 34.8 Baht/USD
- Unemployment rate (2023): 1 percent
- Poverty headcount ratio at national poverty line (2021): 6.3 percent
- Net FDI (2023): US$ -7.16 billion
- Population (2023): 70.18 million
- Real GDP growth (y/y percent change):
- 2019: 2.1
- 2020: -6.1
- 2021: 1.6
- 2022: 2.5
- 2023: 1.9
- 2024 (projection): 2.7
- 2025 (projection): 2.9
- 2026 (projection): 2.6
- Consumption growth:
- 2019: 3.4
- 2020: -0.3
- 2021: 1.3
- 2022: 4.8
- 2023: 4.6
- 2024 (projection): 4.3
- 2025 (projection): 4.0
- 2026 (projection): 2.3
- Gross fixed investment growth:
- 2019: 2.0
- 2020: -4.8
- 2021: 3.1
- 2022: 1.2
- 2023: 0.1
- 2024 (projection): 4.1
- 2025 (projection): 1.8
- 2026 (projection): 2.4
- Inflation and CPI (y/y percent change):
- Headline CPI (period average) 2024: 0.4
- Headline CPI (end of period): 1.7
- Core CPI (period average): 0.8
- Core CPI (end of period): 1.4
- Saving and investment (percent of GDP):
- Gross domestic investment (2023): 20.8
- Gross national saving (2023): 24.0
- Foreign saving (2023): -1.8
- Fiscal and public debt:
- General government balance (2023): -3.2 (percent of GDP)
- Public sector balance (2023): -3.3 (percent of GDP)
- Public sector debt (end of period, 2023): 62.4 (percent of GDP)
- Public sector debt projections:
- 2024: 63.3
- 2025: 64.7
- 2026: 65.4
- 2027: 66.0
- 2028: 66.1
- 2029: 66.4
- Balance of payments (billions of U.S. dollars):
- Current account balance (2019): 38.3
- Current account balance (2020): 20.9
- Current account balance (2021): -10.7
- Current account balance (2022): -17.2
- Current account balance (2023): 7.4
- Current account balance (2024, projection): 9.5
- Current account balance (2025, projection): 11.9
- Exports of goods, f.o.b. (billions of U.S. dollars):
- 2019: 242.7
- 2020: 227.0
- 2021: 270.6
- 2022: 285.2
- 2023: 280.7
- 2024 (projection): 293.6
- 2025 (projection): 301.8
- Imports of goods, f.o.b. (billions of U.S. dollars):
- 2019: 216.0
- 2020: 186.6
- 2021: 238.6
- 2022: 271.6
- 2023: 261.4
- 2024 (projection): 274.9
- 2025 (projection): 284.6
- Gross official reserves (including net forward position, end of period, billions of U.S. dollars):
- 2019: 259.0
- 2020: 286.5
- 2021: 279.2
- 2022: 245.8
- 2023: 254.6
- 2024 (reported): 262.5
- Exchange rate (baht/U.S. dollar):
- 2019: 31.0
- 2020: 31.3
- 2021: 32.0
- 2022: 35.1
- 2023: 34.8
- 2024 (reported): 35.3
- External debt (percent of GDP):
- 2019: 31.7
- 2020: 38.0
- 2021: 38.9
- 2022: 40.6
- 2023: 38.2
- 2024 (projection): 38.4
- Memorandum:
- Nominal GDP (billions of baht):
- 2019: 16889.2
- 2020: 15661.3
- 2021: 16188.6
- 2022: 17378.0
- 2023: 17922.0
- 2024 (projection): 18603.0
- 2025 (projection): 19371.2
- 2026 (projection): 20282.2
IMF Executive Board Concludes 2024 Article IV Consultation with Thailand, February 11 (Executive Board decision endorsed on a lapse-of-time basis).
