## IMF Staff Completes 2024 Article IV Mission to Thailand

_IMF News, November 26, 2024_

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## Bibliographic details
- Published: November 26, 2024

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### Macroeconomic outlook and key projections
- Growth is projected at 2.7 percent in 2024 and 2.9 percent in 2025.
- Inflation remains low but is expected to increase gradually and to return to the authorities’ target range (1 to 3 percent) by end-2024.
- Economic activity expanded by 1.9 percent in 2023 and by 2.3 percent in the first three quarters of 2024.
- International tourist arrivals recovered to around 90 percent of the pre-pandemic levels, although tourism receipts remain somewhat lower.
- Public consumption increased by only 1.6 percent in the first three quarters of 2024.
- Public investment contracted by -2.3 percent in the first three quarters of 2024.
- The mission’s report is to be presented to the IMF’s Executive Board, which is tentatively scheduled to discuss the Staff Report in February 2025.

### Risks and scenarios
- Outlook described as highly uncertain with risks tilted to the downside.
- External risks:
  - Escalation of global trade tensions or heightened trade uncertainty could slow global and regional growth, disrupt Thailand’s export recovery, and dampen FDI inflows.
  - Increased commodity price volatility could affect growth, lead to inflation spikes, and potentially tighter-for-longer global financial conditions.
- Domestic risks:
  - The private sector debt overhang could lead to increased defaults and non-performing loans (NPLs), impair credit supply, and negatively affect growth.

### Fiscal policy recommendations
- As the cyclical recovery continues and economic slack narrows, policy focus should shift to rebuilding policy space.
- Near term:
  - A somewhat smaller fiscal expansion than currently envisaged would help support the recovery while preserving fiscal space.
  - Alternatively, reallocating at least part of the planned cash transfers toward productivity-enhancing investments or social protection reforms.
- From FY26:
  - A credible, revenue-based medium-term fiscal consolidation should proceed to rebuild fiscal space and bring down public debt.
  - Starting in FY26, a gradual, growth-friendly medium-term fiscal consolidation is needed to bring down public debt and create fiscal space for rising spending needs to address population aging and climate change risks.
- The FY2025 budget envisages planned fiscal stimulus measures and a pickup in public investment.

### Monetary policy recommendations
- The mission welcomes the Bank of Thailand (BOT)’s decision to cut the policy rate by 25 bps in October.
- A further reduction in the policy rate would support the ongoing recovery and improve borrowers’ debt-servicing capacity.
- Given remaining high uncertainty and two-sided risks to inflation, authorities should stand ready to adjust monetary policy in a data and outlook-dependent manner.
- The flexible exchange rate should continue to act as a shock absorber.

### Financial stability and household debt
- Addressing the persistent household debt overhang requires a resolute, well-coordinated and comprehensive approach.
- Staff welcomes authorities’ measures to:
  - Enhance financial literacy.
  - Implement responsible lending guidelines.
  - Provide debt restructuring options to viable borrowers while limiting moral hazard.
- Staff recommends simultaneous and forceful implementation of personal debt workouts via more effective bankruptcy proceedings to address the existing household debt stock and allow impaired borrowers a “fresh start.”

### Structural reforms to lift potential growth
- To reverse the downward trend in potential growth, resolute structural reforms are needed, including:
  - Facilitating competition and openness.
  - Increasing export sophistication by leveraging digitalization.
  - Upskilling and reskilling the labor force.
  - Liberalizing the service sector.
  - Strengthening governance.
- Infrastructure priorities:
  - Upgrading physical and ICT infrastructure to harness digital and green economy benefits, boost productivity and resilience, raise private investment, and improve social outcomes.
- Social protection:
  - Enhancing social protection could help low-income households better withstand shocks and address structural drivers of household debt accumulation.
- Together, these policies would support stronger and more inclusive growth and facilitate external rebalancing.

### Mission details and statement
- An IMF staff team, led by Ms. Corinne Deléchat, held the 2024 Article IV Consultation with Thailand between November 11 and 26, 2024.
- End-of-Mission press release date: November 26, 2024.
- Press Release No. 24/442.
- The views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.

*Source: IMF Staff Completes 2024 Article IV Mission to Thailand (Press Release No. 24/442, November 26, 2024).*

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## References

- [Thailand and the IMF](http://www.imf.org/external/country/THA/index.htm)
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_Source: https://www.imf.org/en/news/articles/2024/11/26/pr24442-thailand-imf-staff-completes-2024-article-iv-mission_