GDP growth rises to over two-year high in Q4, but misses forecasts

Economic recovery gathers pace: The economy ended 2024 on a high note, expanding 3.2% year on year in the fourth quarter, up from 3.0% in the third quarter. The figure marked the strongest increase since Q3 2022 but fell short of market expectations. On a seasonally adjusted quarter-on-quarter basis, GDP rose 0.4% (Q3: +1.2% qoq s.a.). In 2024 as a whole, the economy expanded 2.5% year on year, ticking up from 2023’s 2.0% rise.

Net exports underpin improvement: Domestically, private consumption growth picked up to 3.4% year-on-year in Q4 from 3.3% in Q3, failing to gain significant momentum from government stimulus. Moreover, fixed investment growth hit an over two-year high of 5.1% in the fourth quarter, up from the third quarter's 5.0%. On the flipside, government consumption growth slowed to 5.4% in Q4 (Q3: +6.1% yoy). Externally, net trade contributed to overall growth in Q4, after stagnating in the prior quarter. Exports of goods and services growth improved to 11.5% year on year in the fourth quarter, which marked the best reading since Q1 2022 (Q3: +9.9% yoy). Conversely, imports of goods and services growth moderated to 8.2% in Q4 (Q3: +10.3% yoy).

GDP growth to continue gaining steam in 2025: Looking ahead, the government’s cash handout scheme should keep GDP growth close to Q4’s level in H1 2025, while greater trade frictions will weigh on momentum in H2. In 2025 as a whole, the economy is forecast to expand at the fastest rate since 2018, buoyed by quicker expansions in public spending and fixed investment. That said, uncertainty in global trade will cap exports growth, and higher inflation plus elevated household debt will weigh on private spending, keeping economic momentum below the pre-pandemic 10-year average of 3.6%. Risks are tilted to the downside and include rising global protectionism threatening export demand and potential instability in domestic politics due to a fragmented coalition.

Panelist insight: EIU analysts commented on the outlook: “Although the fourth-quarter data provide evidence that the Thai economy is finally on firmer footing after the pandemic, there are plenty of challenges ahead, in particular for private-sector demand. The high level of household debts weighs over private consumption from growing at a faster pace as the Bank of Thailand is trying to lower the overall level of indebtedness. Private investment will continue to be challenged by transformation in the manufacturing sector, such as with automotives. The threat of higher tariffs from the US and a less friendly global trade landscape will keep companies cautious in their expansion plans in 2025-26. Exports of goods are unlikely to maintain the strong level of growth seen in the second half of 2024 as the upturn in the electronics cycle tapers down and higher tariffs add to challenges.”

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