Thailand’s economic growth is expected to accelerate to 3.2% in 2024, a notable increase from this year’s 2.5%, according to the World Bank’s semi-annual Thailand Economic Monitor released today. This growth is attributed to the recovery in tourism, an upturn in goods exports, and sustained private consumption.
The report highlights that the economic growth in 2023 was hindered by a decline in goods exports and ongoing fiscal consolidation. The projection for 2025 suggests a more moderate expansion at 3.1%.
In terms of inflation, headline inflation is anticipated to decrease to 1.1% in 2024, mainly due to low energy prices, while food prices are expected to rise.
The World Bank emphasizes the potential positive impact of Thailand’s planned digital wallet program, estimated to be around 2.7% of GDP. If implemented, this initiative could further boost near-term growth by 0.5 to 1 percentage point over the 2024-2025 period. Consequently, the fiscal deficit may increase to 4% to 5% of GDP, with public debt reaching 65% to 66% of GDP.
However, the report outlines potential risks, such as heightened geopolitical conflicts and high oil prices, which could lead to inflationary pressures due to Thailand’s significant dependency on energy imports. To mitigate these risks, transitioning to a lower-carbon growth path is recommended, promoting energy security and positioning Thailand as a regional leader in green and sustainable development.
The report emphasizes the critical role of carbon pricing, whether through carbon taxes or an emissions trading scheme, in achieving ambitious reductions in greenhouse gas emissions. The World Bank suggests that Thailand could leverage carbon pricing to stabilize emission levels, but additional measures, potentially with high carbon prices, may be necessary for substantial emissions reduction.
Fabrizio Zarcone, World Bank Country Manager for Thailand, underlines the importance of incorporating carbon pricing into Thailand’s policy framework as the country aims for net-zero emissions by 2065 and a 30% reduction in emissions by 2030. Addressing air pollution, a significant economic and public health concern, is also a key aspect, and carbon pricing can contribute to improving urban air quality, reducing illness, and associated healthcare costs.
In conclusion, while Thailand has implemented various policies to reduce carbon emissions and initiated steps toward comprehensive carbon pricing, the report emphasizes the need for increased policy ambition to meet current emission reduction targets.
Source: World Bank