Thai growth upgraded as cash handout improves outlook

Analysts have upgraded Thailand’s GDP forecast for this year and next to 2.8% and 3%, respectively, thanks to the government’s cash handout lifting the economy, but warned of an “economic cliff” in 2026 if no new growth engine is introduced.
Kiatnakin Phatra Research (KKP) and BofA Global Research both increased their Thai GDP outlooks for 2024 from 2.6% to 2.8%, with the forecasts for next year rising from 2.8% to 3.0%. They noted the government’s 10,000-baht cash handouts will temporarily help the Thai economy.
KKP said the revised GDP forecast reflects a short-term economic recovery driven by cash handouts to low-income earners in the fourth quarter, with an additional stimulus budget set aside for 2025.
The Thai economy is likely to benefit in the short term from the handout, with 142 billion baht distributed to vulnerable groups, or roughly 0.7% of GDP, noted KKP. The brokerage estimates an economic multiplier of 0.3%, likely resulting in Thai growth in the fourth quarter exceeding 4%.
In fiscal 2025, another budget of 150-180 billion baht, or 0.8-0.9% of GDP, has been approved for stimulus. KKP expects the second cash handout to be available in the second and third quarter of next year, helping the Thai economy grow by 3% in 2025.
Exports improved, particularly in the electronics sector, with KKP increasing its 2024 real export growth estimate from 1.3% to 2.3%.
“The positive impact from improved shipments may not be as great as in the past because of several reasons,” according to the brokerage.
“The improved exports for some products are likely due to ‘rerouting’, or changing the trade route from China to the US directly to sending products via Thailand to avoid tariff barriers, which may have relatively little added value domestically.”
BofA said the revised GDP estimates reflect the fiscal stimulus, optimism for the new government’s policies, and a cyclical upturn in exports and manufacturing.
“Despite medium-term challenges, we see cyclical tailwinds that would support growth in the short term, but the impacts could be short-lived,” BofA said in a research note jointly prepared by emerging Asia economist Pipat Luengnaruemitchai.
However, Thailand faces several strong structural headwinds that remain obstacles, “capping the country’s medium-term growth”, noted the research.
These challenges include unfavourable demographic shifts, competitiveness issues, a decline in investment, and the negative macro-financial feedback loops as asset quality deteriorates and banks are reluctant to lend.
“What Thailand needs are ambitious and serious reforms to lift up its medium-term growth potential,” the research noted.
“Without the reforms and new engines of growth, the economy could face an economic cliff in 2026 as the impact of the fiscal stimulus wanes and the growth contribution from foreign tourism fades.”
Without new growth engines, GDP expansion in 2026 could slow towards 2.5%, according to the report.