Think-Tank agency reported Thai economy in the first quarter grew by 1.5% because a support of private investment and tourism industry.
Secretary General to the National Economic and Social Development Council (NESDC) Danucha Pichayanan said
Thai economy in the first quarter of 2024 grew by 1.5%. Main contributions are from the private investment and tourism industry.
“The Thai economy in the first quarter of 2024 expanded by 1.5 %(%YoY),
continuing from 1.7 % in the previous quarter. After seasonally adjusted, the economy increased by 1.1 % from the fourth quarter of 2023(%QoQ sa).
Tourism and private investment drive the growth
He said on the expenditure side, the economy was mainly drive
by the robust growth of export of services and private consumption, along with the continual expansion of private investment.
However, export of goods, public investment and government consumption expenditure contracted.
He said private consumption expenditures increased favorably by 6.9 %, continuing from a 7.4% expansion in the previous quarter,
as a result of robust growth of spending in service activities, particularly in the tourism sector, together with the highest consumer confidence in 18 quarters.
Expenditure in services continued a strong growth of 13.7 %, driven by expansions in accommodation
and food service activities as well as financial and insurance activities by 42.7 % and 8.0 %, respectively.
Government investment dropped by 2.1%
Government consumption expenditure dropped by 2.1 % continued from a 3 % contraction in previous quarter, following a decrease in expenditure on goods and services of 7.6 % and social transfers in kind for goods and services of 10.7 percent.
On the contrary, compensation of employees (wage and salary) grew by 1.9 percent. The disbursement rate of current budget in this quarter was 19.7 percent of total budget, lower than 32 % in the previous quarter and 23.4 % in the same quarter of last year.
Total investment contracted by 4.2%
Total investment contracted by 4.2 %, worsening from a 0.4-% decrease in the previous quarter. This decline was mainly due to a continual decline of public investment for the fourth consecutive quarter of 27.7 % compared to 20.1 % contraction in the previous quarter.
This contraction was mainly attribut to a 46.0-% decrease in government investment due to the delay in FY2024’s budgetary process. State-Owned Enterprises (SOEs) investment also decreased by 2.8 %. The disbursement rate of capital budget in this quarter was 5.2 % of total budget, lower than 6.4 % in the previous quarter and 17.7 % in the same quarter of last year.
Private investment grew by 4.6%
In contrast, private investment grew by 4.6 %, continuing from a 5 % increase in the previous quarter, marking the ninth consecutive quarter of positive growth. Machinery and equipment investment increased by 4.5 %, continuing from a 5.2 % growth in the prior quarter.
Meanwhile, construction investment increased by 5.2 %, accelerating from 3.4 % in the previous quarter.
Export value was record at US$ 69.592 billion, declining by 1 %, due to a 2.3% drop in the exports volume, although export price expanded by 1.3 %.
Revised down Thai economy to 2.5%
Mr Danucha said the Thai economy in 2024 is project to expand in the range of 2.0 – 3.0 %(with the midpoint projection of 2.5 %).
“The projection is revise down from a midpoint projection of 2.7%, as of February 18.
Key supporting factors include: (1) the expected higher momentum from government expenditure and public investment over the remaining of the year; (2) the continual recovery of tourism sector; (3) the favorable growths of private consumption and investment; and (4) the gradual return to an expansion of goods exports in line with the global trade recovery.
Nonetheless, the Thai economy is still expect to face some downside risks
and limitations that could result in a lower-than-expected expansion, especially:(1) the remaining high levels of household and corporate debts;
(2) the risk of flood on agricultural production; and (3) the uncertain and volatile global financial market. Headline inflation is estimat to be in the range of 0.1 – 1.1 % and the current account is projected to record a surplus of 1.2 % of GDP.
Key growth contributions
Private consumption expenditure is expect to increase by 4.5 % , continuing
from a solid growth of 7.1 % in 2023, and an upward revision from 3 % in the previous estimation.
Government consumption expenditure is project to expand by 1.7 %, improving
from a 4.6 % reduction in 2023, and an upward revision from a 1.5 % growth in the previous estimation.
The adjustment aligns with the disbursement of government expenditure after the enactment of the FY2024
government budget on April 26th, 2024 and an upward revise in the FY2025 government budget framework.
Total investmentis expect to increase by 1.9 %, accelerating from a 1.2 % in 2023. Private investmentis estimat to increase by 3.2 %, consistent with the previous year’s growth. This was in accordance with the continuous growth of investment promotion application and certificate issuance.
Nevertheless, this was a downward revision from a 3.5% in the previous estimation in accordance
with remaining low capacity utilization rate and downward revision of exports.
Public investmentis anticipat to decline by 1.8 %, consistent with the previous estimation, and continuing from a 4.6 % decrease in the previous year, including a delay in the FY2024 budgetary process and a decrease in the State-Owned Enterprises’ investment budget framework.
Export value of goods in US dollar term is anticipat to rebound to 2 %, compare with a 1.7 % reduction in 2023, though a downward revision from a 2.9 % growth in the previous estimation.
The export volume in 2024 is expect to increase by 1.5 %, compare with a 2.9% decline in the previous year, and a downward revision from a 2.4% in the previous forecast.
The revision is due to a decline in export volume in the first quarter of 2024 and the downward revision of the world trade volume growth forecast.
Together with the continual increase in export of services due to higher-than expected inbound tourists, thus, in 2024, it is expect that the export quantity of goods and services will continue to increase by 4.7 %, accelerating from a 2.1 % in 2023, but a downward revision from a 5 % in the previous estimation.
Economic Management for 2024
The economic management for the remainder of 2024
- 1) Expediting the budget disbursement
- 2) Maintaining adequate liquidity for the business sector, especially SMEs
- 3) Supporting agricultural production and farmers’ income
- 4) Fostering the export sector as well as expediting the restructuring of the economy both manufacturing and service sector
- 5) Monitoring and preparing measures to address risks arising from fluctuations in the global economic and financial system.
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